What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 174 added, 125 removed, 498 unchanged (38% of the section changed)

3 unchanged sentences

(in millions)

September 30,

Cash and cash equivalents

6 unchanged sentences

$ 412.8 and $ 389.4 , respectively

Operating lease right-of-use asset

Operating lease right-of-use assets

Total other assets

8 unchanged sentences

LIABILITIES AND SHAREHOLDERS’ EQUITY

September 30,

Current Liabilities:

29 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Revenues from services

3 unchanged sentences

Selling and administrative expenses

Operating (loss) profit

Operating profit

Interest and other expenses (income), net

(Loss) earnings before income taxes

Earnings before income taxes

Provision for income taxes

Net (loss) earnings

Net (loss) earnings per share – basic

Net (loss) earnings per share – diluted

Net earnings (loss)

Net earnings (loss) per share – basic

Net earnings (loss) per share – diluted

Weighted average shares – basic

5 unchanged sentences

Three Months Ended

Six Months Ended

Net (loss) earnings

Nine Months Ended

September 30,

Net earnings (loss)

Other comprehensive income (loss):

1 unchanged sentence

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

Translation adjustments on derivative instruments, net of income (benefit) taxes of $( 12.6 ), $ 9.6 , $( 12.5 ) and $ 11.6 , respectively

Translation adjustments of long-term intercompany loans

8 unchanged sentences

(in millions)

Six Months Ended

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

2 unchanged sentences

Depreciation and amortization

Noncash gain on disposition of previously held equity interest

Noncash goodwill and other impairment charges

Non-cash gain on disposition of previously held equity interest

Non-cash gain on disposition of previously held controlling interest

Non-cash goodwill and other impairment charges

Non-cash operating lease right-of-use assets impairment

Deferred income taxes

8 unchanged sentences

Acquisition of businesses, net of cash acquired

Impact to cash resulting from deconsolidation of subsidiaries

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

Cash (used in) provided by investing activities

Cash used in investing activities

Cash Flows from Financing Activities:

36 unchanged sentences

Balance, June 30, 2020

Other comprehensive income

Issuances under equity plans

Share-based compensation expense

Noncontrolling interest transactions

Balance, September 30, 2020

ManpowerGroup Shareholders

10 unchanged sentences

Share-based compensation expense

Repurchases of common stock

Noncontrolling interest transactions

Balance, June 30, 2019

Other comprehensive loss

Issuances under equity plans

Share-based compensation expense

Repurchases of common stock

Noncontrolling interest transactions

Balance, September 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 and six months ended June 30, 2020 and 2019

For the three and nine months ended September 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 and six months ended June 30, 2020 were significantly negatively impacted by the COVID-19 crisis.

Our business, operations and consolidated financial statements for the three and nine months ended September 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.

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.

At the beginning of the third quarter, it appeared the impact of the COVID-19 crisis was stabilizing in many parts of the world, and economies slowly reopened.

However, as the third quarter came to a close, a number of countries started to see increased cases of COVID-19 that are leading to the implementation of new restrictions in an effort to mitigate the spread.

Unlike the lockdowns and restrictions experienced earlier in the year, we do not anticipate the same country-wide lockdowns, but more targeted and localized restrictions.

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

8 unchanged sentences

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

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Balance, December 31, 2019

2 unchanged sentences

Reclassifications and other

Balance, June 30, 2020

Balance, September 30, 2020

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

18 unchanged sentences

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

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 during the second quarter of 2019.

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.

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.

1 unchanged sentence

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 .

As a result of our interim test, we recognized a non-cash impairment loss of $ 66.8 , which resulted in full impairment of the remaining goodwill in the Germany reporting unit.

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.

We performed our annual impairment test of our goodwill and indefinite-lived intangible assets during the third quarter of 2020 and determined that there was no impairment of our goodwill or indefinite-lived intangible assets.

The table below provides our reporting units’ estimated fair values and carrying values, determined as part of our annual goodwill impairment test performed in the third quarter, representing approximately 80 % of our consolidated goodwill balance as of September 30, 2020.

(in millions)

United States

Right Management

United Kingdom

Estimated fair values

Carrying values

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 United Kingdom and Netherlands reporting units.

The United Kingdom reporting unit had a fair value exceeding carrying value of approximately 12 %.

Key assumptions included in the United Kingdom (Northern Europe Segment) discounted cash flow valuation performed during the third quarter of 2020 were a discount rate of 11.5 %, a terminal value revenue growth rate of 1.0 %, and a terminal value OUP margin of 3.1 %.

The Netherlands reporting unit fair value exceeded its carrying value by less than 10 %, approximating 3.3 %.

The Netherlands is part of the Northern Europe Segment.

Key assumptions included in the Netherlands discounted cash flow valuation performed during the third quarter of 2020 included a discount rate of 10.9 %, a terminal value revenue growth rate of 2.0 %, and a terminal value OUP margin of 3.5 %.

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, some or all of the recorded goodwill for the Netherlands reporting unit, which was $ 114.5 million as of September 30, 2020, could be subject to impairment.

While our other reporting units fair values exceeded 10 % or more of their respective carrying values, 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

30 unchanged sentences

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 June 30, 2020 , related to remaining performance obligations, which are not material.

We have other contracts with revenues expected to be recognized subsequent to September 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 $ 37.3 at June 30, 2020 and $ 44.5 at December 31, 2019.

Our deferred revenue was $ 34.2 at September 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 June 30,

3 Months Ended September 30,

United States

3 unchanged sentences

Northern Europe

6 Months Ended June 30,

9 Months Ended September 30,

United States

4 unchanged sentences

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

3 Months Ended June 30,

3 Months Ended September 30,

United States

3 unchanged sentences

Northern Europe

6 Months Ended June 30,

9 Months Ended September 30,

United States

4 unchanged sentences

(4) Share-Based Compensation Plans

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.

During the three months ended September 30, 2020 and 2019, we recognized share-based compensation expense of $ 6.9 and $ 5.9 , respectively, and $ 18.4 and $ 18.8 for the nine months ended September 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 $ 6.8 and $ 5.3 for the six months ended June 30, 2020 and 2019, respectively.

(5) Acquisitions

Consideration received from share-based awards was $ 7.4 and $ 6.3 for the nine months ended September 30, 2020 and 2019, respectively.

(5) Acquisitions and Dispositions

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

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.

For the nine months ended September 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 September 30, 2020 we disposed of four businesses (Serbia, Croatia, Slovenia, Bulgaria) in our Southern Europe segment for net proceeds of $ 5.8 , subject to normal post close working capital adjustments and simultaneously entered into franchise agreements with the new ownership of these businesses.

In connection with the disposition we recognized a one-time loss on disposition of $ 5.8 , which was included in the selling and administrative expenses in the Consolidated Statement of Operations for the three and nine months ended September 30, 2020.

Switzerland Acquisitions

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

2 unchanged sentences

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.

The aggregate cash consideration paid was $ 219.5 as of September 30 , 2019 and was funded through cash on hand.

Of the total consideration paid, $ 58.3 was for the acquired interests and the remaining $ 161.2 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 aggregate cash consideration paid reflects a post-closing settlement of net debt and net working capital adjustments of $ 6.8 , which we paid out during the third quarter of 2019.

The total cash impact of the acquisition was an inflow of $ 98.0 , 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.

1 unchanged sentence

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.

Excluding Manpower Switzerland and Experis AG, the total cash consideration paid for acquisitions, net of cash acquired, was $ 39.5 for the nine months ended September 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.

ManpowerGroup Greater China Limited Disposition

On July 10, 2019, our joint venture in Greater China, ManpowerGroup Greater China Limited, became listed on the Main Board of the Stock Exchange of Hong Kong Limited through an initial public offering.

Prior to the initial public offering, we owned a 51 % controlling interest in the joint venture and consolidated the financial position and results of its operations into our Consolidated Financial Statements as part of our APME segment.

As a result of the offering, in which ManpowerGroup Greater China Limited issued new shares representing 25 % of the equity of the company, our ownership interest was diluted to 38.25 %, and then further diluted to 36.87 % as the underwriters exercised their overallotment option in full on August 7, 2019.

As a result, we deconsolidated the joint venture as of the listing date and account for the remaining interest under the equity method of accounting and record our share of equity income or loss in interest and other expenses (income), net in the Consolidated Statement of Operations.

In connection with the deconsolidation of the joint venture, we recognized a one-time cash gain of $ 30.4 , which was included in selling and administrative expenses in the Consolidated Statement of Operations in the quarter ended September 30, 2019.

Included in the $ 30.4 was foreign currency translation adjustment losses of $ 6.2 related to the joint venture from accumulated other comprehensive income.

(6) Restructuring Costs

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 recorded net restructuring costs of $ 98.1 and $ 42.5 during the nine months ended September 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 $ 22.6 during the nine months ended September 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 September 30, 2020.

The costs paid, utilized or transferred out of our restructuring reserve were $ 55.5 during the nine months ended September 30, 2020.

We expect a majority of the remaining $ 49.9 reserve will be paid by the end of 2020.

2 unchanged sentences

Severance costs

Office closure and other costs

Office closure costs

Costs paid, utilized or transferred out

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.

Balance, September 30, 2020

Balances related to the United States were $ 0.3 and $ 4.3 as of December 31, 2019 and September 30, 2020 , respectively.

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

Balances related to Italy were $ 0.3 and $ 1.8 as of December 31, 2019 and September 30, 2020, respectively.

(7) Income Taxes

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.

We recorded income tax expense at an effective rate of 81.5 % for the three months ended September 30, 2020, as compared to an effective rate of 28.6 % for the three months ended September 30, 2019.

The 2020 rate was unfavorably impacted by the relatively low level and mix of pre-tax earnings, tax losses in certain countries for which we did no t recognize a corresponding tax benefit due to valuation allowances, including the recognition of a discrete valuation allowance in Germany, 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.

The effective tax rate of 81.5 % for the three months ended September 30, 2020 was significantly higher than the United States Federal statutory rate of 21 % primarily due to the factors noted above.

We recorded income tax expense at an effective rate of 407.4 % for the nine months ended September 30, 2020, as compared to an effective rate of 34.5 % for the nine months ended September 30, 2019.

The effective tax rate of 407.4 % for the nine months ended September 30, 2020 was significantly higher than the United States Federal statutory rate of 21 % primarily due to the factors noted above.

As of September 30, 2020, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $ 68.2 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 .

3 unchanged sentences

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

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

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

(8) Net (Loss) Earnings Per Share

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

(8) Net Earnings (Loss) Per Share

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

3 Months Ended

9 Months Ended

Net (loss) earnings available to common shareholders

September 30,

Net earnings (loss) available to common shareholders

Weighted-average common shares outstanding (in millions)

3 unchanged sentences

Weighted-average common shares outstanding - diluted

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.

Net earnings (loss) per share - basic

Net earnings (loss) per share - diluted

Due to the net loss for the nine months ended September 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 nine months ended September 30, 2020.

There were 0.7 million and 0.4 million share-based awards excluded from the calculation of net earnings per share - diluted for the three months ended September 30, 2020 and 2019, respectively, and 1.5 million and 0.4 million share-based awards excluded from the calculation of net earnings (loss) per share - diluted for the nine months ended September 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:

June 30, 2020

September 30, 2020

December 31, 2019

6 unchanged sentences

Total intangible assets

(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.

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

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

Total consolidated amortization expense related to intangible assets for the remainder of 2020 is expected to be $ 6.8 and in each of the next five years as follows:

4 unchanged sentences

Balance, December 31, 2019

Currency impact

Currency & other impacts

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.

Balance, September 30, 2020

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

(2) Balances related to France were $ 67.3 and $ 70.3 as of December 31, 2019 and September 30, 2020, respectively.

Balances related to Italy were $ 4.6 and $ 4.0 as of December 31, 2019 and September 30, 2020.

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

1 unchanged sentence

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

Jefferson Wells is now part of the United States reporting unit.

Jefferson Wells is part of the United States reporting unit.

For purposes of monitoring our total assets by segment, we do not allocate the Corporate balance to the respective reportable segments as this is commensurate with how we operate our business.

2 unchanged sentences

Goodwill balances by reporting unit were as follows:

September 30,

United States

8 unchanged sentences

9 Months Ended

September 30,

Interest cost

5 unchanged sentences

9 Months Ended

September 30,

Interest cost

1 unchanged sentence

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 the three and nine months ended September 30, 2020, contributions made to our pension plans were $ 5.3 and $ 16.3 , respectively, and contributions made to our retiree health care plan were $ 0.3 and $ 0.9 , respectively.

During 2020, we expect to make total contributions of approximately $ 17.6 to our pension plans and to fund our retiree health care payments as incurred.

Pension Settlement

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

During the nine months ended September 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.

5 unchanged sentences

The components of accumulated other comprehensive loss, net of tax, were as follows:

September 30,

Foreign currency translation

Translation gain on derivative instruments, net of income taxes of $( 9.0 ) and $( 9.1 ), respectively

Translation (loss) gain on derivative instruments, net of income taxes of $( 21.6 ) and $( 9.1 ), respectively

Translation loss on long-term intercompany loans

5 unchanged sentences

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

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.

We recorded expenses of $ 0.1 and $ 0.2 , respectively, for the three months ended September 30, 2020 and 2019, respectively, and income of $ 0.9 and an expense of $ 1.3 for the nine months ended September 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 .

5 unchanged sentences

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 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.

During the first nine 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 nine months of 2020 all occurred within the first quarter of 2020.

During the first nine months of 2019, we repurchased a total of 1.8 million shares at a cost of $ 152.0 under the 2018 authorization.

As of September 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

2 unchanged sentences

9 Months Ended

September 30,

Interest expense

Interest income

Foreign exchange loss (gain)

Foreign exchange loss

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.

Miscellaneous (income) expense, net for the nine months ended September 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.

Miscellaneous (income) expense, net for the nine months ended September 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.

10 unchanged sentences

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 ($ 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.

The € 400.0 ($ 467.8 ) notes due September 2022 and the € 500.0 ($ 581.8 ) notes due June 2026 were designated as a hedge of our net investment in our foreign subsidiaries with a Euro-functional currency as of September 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 and six months ended June 30, 2020 and 2019 was as follows:

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

Gain (Loss) Recognized in Other Comprehensive Income

3 Months Ended June 30,

6 Months Ended June 30,

3 Months Ended September 30,

9 Months Ended September 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 and six months ended June 30, 2020 and 2019:

(Loss) Gain Reclassified

1 unchanged sentence

from AOCI into Income

3 Months Ended June 30,

3 Months Ended September 30,

Location of (Loss) Gain Reclassified

3 Months Ended June 30,

3 Months Ended September 30,

from AOCI into Income

4 unchanged sentences

from AOCI into Income

6 Months Ended June 30,

9 Months Ended September 30,

Location of (Loss) Gain Reclassified

6 Months Ended June 30,

9 Months Ended September 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 June 30, 2020 to be reclassified into earnings within the next 12 months will not be significant.

We expect the net amount of pre-tax derivative gains included in AOCI at September 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.

3 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 and six months ended June 30, 2020 was as follows:

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

Location of Gain

1 unchanged sentence

Recognized in Income

3 Months Ended June 30,

6 Months Ended June 30,

3 Months Ended September 30,

9 Months Ended September 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 June 30, 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 September 30, 2020 and December 31, 2019:

September 30,

Balance Sheet Location

3 unchanged sentences

Total instruments

September 30,

Balance Sheet Location

6 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 $ 1,033.2 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.

The fair value of the Euro-denominated notes, as observable at commonly quoted intervals (Level 2 inputs), was $ 1,092.8 and $ 1,062.5 as of September 30, 2020 and December 31, 2019, respectively, compared to a carrying value of $ 1,049.6 and $ 1,002.9 , respectively.

Our deferred compensation plan assets were $ 109.7 and $ 107.3 as of September 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:

Three Months Ended June 30,

6 Months Ended June 30,

Three Months Ended September 30,

9 Months Ended September 30,

Operating lease expense

4 unchanged sentences

Other information related to leases was as follows:

6 Months Ended June 30,

9 Months Ended September 30,

Supplemental Cash Flow Information

1 unchanged sentence

Operating ROU assets obtained in exchange for lease obligations

September 30,

Supplemental Balance Sheet Information

9 unchanged sentences

Operating leases

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

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

(In millions)

Period Ending June 30, 2020

Period Ending September 30, 2020

Operating Leases

15 unchanged sentences

Northern Europe;

The Americas, Southern Europe, Northern Europe and APME segments derive a significant majority of their revenues from our staffing and interim services.

The segments derive a significant majority of their revenues from our staffing and interim services.

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.

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.

Segment 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 June 30,

6 Months Ended June 30,

3 Months Ended September 30,

9 Months Ended September 30,

Revenues from services:

14 unchanged sentences

Intangible asset amortization expense

Operating (loss) profit

Operating 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.

Earnings before income taxes

In the United States, revenues from services included fees received from the related franchise offices of $ 3.4 and $ 3.5 for the three months ended September 30, 2020 and 2019, respectively, and $ 8.8 and $ 10.8 for the nine months ended September 30, 2020 and 2019, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 116.9 and $ 151.6 for the three months ended September 30, 2020 and 2019, respectively, and $ 315.7 and $ 462.8 for the nine months ended September 30, 2020 and 2019, respectively.

Our consolidated revenues from services include fees received from our franchise offices of $ 3.8 and $ 4.3 for the three months ended September 30, 2020 and 2019, respectively, and $ 9.9 and $ 14.0 for the nine months ended September 30, 2020 and 2019, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 236.9 and $ 274.0 for the three months ended September 30, 2020 and 2019, respectively, and $ 447.3 and $ 680.2 for the nine months ended September 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