What changed in this filing

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Item 1. Financial Statements

2021-05-07 compared with 2020-11-06 · 141 added, 292 removed, 380 unchanged (53% of the section changed)

3 unchanged sentences

(in millions)

September 30,

Cash and cash equivalents

17 unchanged sentences

LIABILITIES AND SHAREHOLDERS’ EQUITY

September 30,

Current Liabilities:

29 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

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 (income), net

Interest and other expenses, net

Earnings before income taxes

Provision for income taxes

Net earnings (loss)

Net earnings (loss) per share – basic

Net earnings (loss) per share – diluted

Net earnings per share – basic

Net earnings per share – diluted

Weighted average shares – basic

2 unchanged sentences

ManpowerGroup Inc.

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in millions)

Three Months Ended

Nine Months Ended

September 30,

Net earnings (loss)

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 (benefit) taxes of $( 12.6 ), $ 9.6 , $( 12.5 ) and $ 11.6 , respectively

Translation adjustments on derivative instruments, net of income taxes of $ 14.4 and $ 5.4 , respectively

Translation adjustments of long-term intercompany loans

1 unchanged sentence

Pension settlement related to a U.S.

plan, net of income taxes of $( 3.9 )

Total other comprehensive income (loss)

Comprehensive (loss) income

plan, net of income taxes of $( 3.9 ) for 2020

Total other comprehensive loss

Comprehensive income (loss)

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

2 unchanged sentences

(in millions)

Nine Months Ended

September 30,

Three Months Ended

Cash Flows from Operating Activities:

Net (loss) earnings

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

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

Depreciation and amortization

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

9 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

Proceeds from the sale of investments, property and equipment

Cash used in investing activities

4 unchanged sentences

Payments of contingent consideration for acquisitions

Proceeds from share-based awards and sale of subsidiaries

Payments to noncontrolling interest

Proceeds from share-based awards

Other share-based award transactions

Repurchases of common stock

Dividends paid

Cash used in financing activities

21 unchanged sentences

Balance, March 31, 2021

Other comprehensive income

Issuances under equity plans

Share-based compensation expense

Noncontrolling interest transactions

Balance, June 30, 2020

Other comprehensive income

Issuances under equity plans

Share-based compensation expense

Noncontrolling interest transactions

Balance, September 30, 2020

ManpowerGroup Shareholders

7 unchanged sentences

Balance, March 31, 2020

Other comprehensive loss

Issuances under equity plans

Share-based compensation expense

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 nine months ended September 30, 2020 and 2019

Notes to Consolidated Financial Statements (Unaudited)

For the three months ended March 31, 2021 and 2020

(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 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.

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.

The COVID-19 crisis began to negatively impact our business, operations and consolidated financial statements during the last two weeks of March 2020, with significant lockdown measures implemented by the end of March 2020 in our main markets in Europe and North America, as well as in certain other countries.

We continued to experience the negative impacts of the COVID-19 crisis in the first quarter of 2021, particularly in Europe, which caused governments to impose more targeted and localized restrictions unlike the country-wide lockdowns and restrictions experienced in March 2020 and the second quarter of 2020.

Although many markets strengthened throughout the first quarter of 2021, these restrictions had an adverse effect of curtailing economic activity in certain markets, affecting demand for our services.

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:

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Balance, December 31, 2020

2 unchanged sentences

Reclassifications and other

Balance, September 30, 2020

Balance, March 31, 2021

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

8 unchanged sentences

Lease expenses for operating leases are recognized on a straight-line basis over the lease term and recorded in selling and administrative expenses on the Consolidated Statements of Operations.

Payroll Tax Credit

In April 2019, we sold a portion of our French payroll tax credits earned in 2018 for net proceeds of $ 103.5 (€ 92.0 ).

We derecognized these receivables and the additional interest upon the sale date as the terms of the agreement are such that the transaction qualifies for sale treatment in accordance with the accounting guidance on the transfer and servicing of assets.

The discount on the sale of these receivables was recorded in cost of services as a reduction of the payroll tax credits.

Goodwill Impairment

4 unchanged sentences

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

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.

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 , 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.

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.

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.

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 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, both of which are part of the Northern Europe segment.

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 United Kingdom 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 had a fair value that exceeded its carrying value by approximately 3.3 %.

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.

Should the operations of the United Kingdom and Netherlands reporting units incur further decreases in the operating results, including declines in profitability and cash flow due to continued deterioration in macroeconomic, industry and market conditions, including uncertainty of the financial impacts from COVID-19, some or all of the recorded goodwill for the Netherlands or United Kingdom reporting units, which were $ 114.6 and $ 101.0 , respectively, as of March 31, 2021 could be subject to impairment.

While our other reporting units fair values exceeded 20 % or more of their respective carrying values, given the uncertainty of the financial impacts from the COVID-19 pandemic, there could be significant 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

Accounting Standards Effective as of January 1, 2021

In June 2016, the FASB issued new accounting guidance on financial instruments.

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 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 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.

The guidance is intended to improve the effectiveness of the notes to financial statements by facilitating clearer communication, and it includes multiple new, eliminated and modified disclosure requirements.

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

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

In August 2018, the FASB issued new guidance on the accounting for internal-use software.

The guidance aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.

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

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

In August 2018, the FASB issued new guidance on disclosures related to defined benefit plans.

The guidance amends the current disclosure requirements to add, remove and clarify disclosure requirements for defined benefit pension and other postretirement plans.

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

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

Recently Issued Accounting Standards

In December 2019, the FASB issued new guidance on income taxes.

The guidance removes certain exceptions to the general income tax accounting principles, and clarifies and amends existing guidance to facilitate consistent application of the accounting principles.

The new guidance is effective for us as of January 1, 2021.

We are assessing the impact of the adoption of this guidance on our Consolidated Financial Statements.

The new guidance was effective for us as of January 1, 2021 .

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

In January 2020, the FASB issued new guidance on equity method investments.

The guidance clarifies the interactions between the existing accounting standards on equity securities, equity method and joint ventures, and derivatives and hedging.

The new guidance addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments.

The new guidance is effective for us as of January 1, 2021.

We do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.

The new guidance

addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments.

The new guidance was effective for us as of January 1, 2021 .

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

Recently Issued Accounting Standards

In March 2020, the FASB issued new guidance on accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offerings related to alternative reference interest rates.

The guidance is effective upon issuance and can be applied to applicable contract modifications through December 31, 2022.

We are currently assessing the impact of the transition from LIBOR to alternative reference interest rates.

This adoption has not had a material impact on our Consolidated Financial Statements.

(3) Revenue Recognition

1 unchanged sentence

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

We have other contracts with revenues expected to be recognized subsequent to March 31, 2021, 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 $ 34.2 at September 30, 2020 and $ 44.5 at December 31, 2019.

Our deferred revenue was $ 35.1 at March 31, 2021 and $ 34.9 at December 31, 2020.

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

See Note 2 to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K for descriptions of revenue service types.

3 Months Ended September 30,

United States

Other Americas

Southern Europe:

Other Southern Europe

Northern Europe

9 Months Ended September 30,

3 Months Ended March 31,

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 September 30,

United States

Other Americas

Southern Europe:

Other Southern Europe

Northern Europe

9 Months Ended September 30,

3 Months Ended March 31,

United States

4 unchanged sentences

(4) Share-Based Compensation Plans

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.

During the three months ended March 31, 2021 and 2020, we recognized share-based compensation expense of $ 7.5 and $ 4.6 , 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 $ 7.4 and $ 6.3 for the nine months ended September 30, 2020 and 2019, respectively.

(5) Acquisitions and Dispositions

Consideration received from share-based awards was $ 1.7 and $ 10.0 for the three months ended March 31, 2021 and 2020, 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 2021 and 2020 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

(5) Acquisitions

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

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.

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 $ 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 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.

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 $ 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.

For the three months ended March 31, 2021, the total cash consideration paid for acquisitions, net of cash acquired, was $ 12.9 , which includes consideration payments for franchises in the United States and contingent consideration payments related to previous acquisitions.

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

(6) Restructuring Costs

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 did no t record any net restructuring costs during the three months ended March 31, 2021.

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

During the three months ended March 31, 2021, we made payments of $ 13.8 out of our restructuring reserve that was created in 2020 and 2019.

We expect a majority of the remaining $ 32.3 reserve will be paid by the end of 2021.

Changes in the restructuring reserve by reportable segment and Corporate are shown below.

Balance, December 31, 2019

Severance costs

Office closure costs

Costs paid, utilized or transferred out

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.

Americas ( 1)

Balance, January 1, 2021

Costs paid or utilized

Balance, March 31, 2021

Balances related to the United States were $ 1.4 and $ 0.9 as of December 31, 2020 and March 31, 2021, respectively.

Balances related to France were $ 0.6 and $ 0.5 as of December 31, 2020 and March 31, 2021.

Balances related to Italy were $ 1.4 and $ 1.1 as of December 31, 2020 and March 31, 2021, respectively.

(7) Income Taxes

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 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.

We recorded income tax expense at an effective rate of 33.3 % for the three months ended March 31, 2021, as compared to an effective rate of 90.2 % for the three months ended March 31, 2020.

The 2021 rate was favorably impacted by the scheduled reduction in the French corporate tax rate to 27.5 %, the enacted 50 % reduction in the French business tax rate, and a higher level of pre-tax earnings.

The 33.3% effective tax rate in the first quarter of 2021 was higher than the United States Federal statutory rate of 21 % primarily due to the French business tax, tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, and the overall mix of earnings.

As of March 31, 2021, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $ 65.2 that would favorably impact the effective tax rate if recognized.

As of December 31, 2020, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $ 64.5 .

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We are routinely audited by the tax authorities of the various tax jurisdictions in which we operate.

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

Generally, the tax years that could be subject to examination are 2014 through 2021 for our major operations in France, Italy, the United Kingdom, and the United States.

As of March 31, 2021, we are subject to tax audits in Austria, Denmark, France, Germany, Netherlands, Portugal, and the United States.

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

(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

(8) Net Earnings Per Share

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

3 Months Ended

September 30,

Net earnings (loss) available to common shareholders

Net earnings available to common shareholders

Weighted-average common shares outstanding (in millions)

3 unchanged sentences

Weighted-average common shares outstanding - diluted

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.

Net earnings per share - basic

Net earnings per share - diluted

There were no shares and 0.6 million share-based awards excluded from the calculation of net earnings per share - diluted for the three months ended March 31, 2021 and 2020, 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:

September 30, 2020

March 31, 2021

December 31, 2020

Goodwill ( 1)

Intangible assets:

5 unchanged sentences

Total intangible assets

(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.

(1) Balances were net of accumulated impairment loss of $ 644.2 as of both March 31, 2021 and December 31, 2020.

(2) Balances were net of accumulated impairment loss of $ 139.5 as of both March 31, 2021 and December 31, 2020.

Total consolidated amortization expense related to intangible assets for the remainder of 2021 is expected to be $ 11.8 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 )

Americas ( 1)

Corporate ( 3 )

Balance, December 31, 2020

Currency & other impacts

Impairment Charge

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.

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

Currency impact

Balance, March 31, 2021

(1) Balances related to the United States were $ 490.2 and $ 493.1 as of December 31, 2020 and March 31, 2021, respectively.

(2) Balances related to France were $ 73.3 and $ 70.4 as of December 31, 2020 and March 31, 2021, respectively.

Balances related to Italy were $ 4.2 and $ 4.0 as of December 31, 2020 and March 31, 2021.

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

4 unchanged sentences

Goodwill balances by reporting unit were as follows:

September 30,

United States

United Kingdom

Right Management

Other reporting units

2 unchanged sentences

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

Defined Benefit Pension Plan

3 Months Ended

9 Months Ended

September 30,

3 Months Ended March 31,

Defined Benefit Pension Plans

Retiree Health Care Plan

Interest cost

1 unchanged sentence

Settlement loss

Total benefit cost

Retiree Health Care Plan

3 Months Ended

9 Months Ended

September 30,

Interest cost

Prior service credit

Total benefit credit

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.

Total benefit cost (credit)

During the three months ended March 31, 2021, contributions made to our pension plans were $ 4.4 and contributions made to our retiree health care plan were $ 0.3 .

During 2021, we expect to make total contributions of approximately $ 16.0 to our pension plans and to fund our retiree health care payments as incurred.

Pension Settlement

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

During the three months ended March 31, 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.

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

The remaining plan assets of $ 16.6 which were in excess of the pension liability upon settlement will be utilized to fund future qualified 401(k) plan contributions following the conclusion of the standard PBGC audit.

The standard PBGC audit was completed in March 2021, and the remaining plan assets of $ 16.6 which were in excess of the pension liability upon settlement will be utilized to fund future qualified 401(k) plan contributions.

(11) Shareholders’ Equity

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

September 30,

Foreign currency translation

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

Translation loss on derivative instruments, net of income tax benefit of $( 20.5 ) and $( 34.9 ), respectively

Translation loss on long-term intercompany loans

Defined benefit pension plans, net of income taxes of $( 35.2 ) and $( 30.9 ), respectively

Retiree health care plan, net of income taxes of $ 2.2 and $ 1.6 , respectively

Defined benefit pension plans, net of income tax benefit of $( 37.9 ) and $( 38.2 ), respectively

Retiree health care plan, net of income taxes of $ 1.8 for both 2021 and 2020

Accumulated other comprehensive loss

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Noncontrolling interests, reported in total shareholders' equity in our Consolidated Balance Sheets, represent amounts related to majority-owned subsidiaries in which we have a controlling financial interest.

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

We recorded expenses of $ 0.1 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 .

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 .

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

We recorded income of $ 0.9 and expenses of $ 0.6 for the three months ended March 31, 2021 and 2020, respectively.

Share Repurchases

In August 2019, the Board of Directors authorized the repurchase of 6.0 million shares of our common stock, with terms consistent with the previous authorizations.

This authorization is in addition to the August 2018 Board authorizations to purchase 6.0 million shares of our common stock each.

This authorization is in addition to the August 2018 Board authorization to purchase 6.0 million shares of our common stock each.

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 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

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

3 Months Ended

During the first quarter of 2021, we repurchased a total of 1.1 million shares under the 2019 authorization at a cost of $ 100.1 .

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 .

As of March 31, 2021, there were 2.3 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, Net

Interest and other expenses, net consisted of the following:

3 Months Ended

September 30,

Interest expense

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Miscellaneous (income) expense, net (1)

Interest and other expenses (income), net

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 nine months ended September 30, 2019 includes an $ 80.4 gain related to our acquisition of the remaining controlling interest in Manpower Switzerland.

Interest and other expenses, net

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.

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

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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 ($ 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.

The € 400.0 ($ 468.5 ) notes due September 2022 and the € 500.0 ($ 582.6 ) 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, 2021.

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 nine months ended September 30, 2020 and 2019 was as follows:

The effect of our net investment hedges on AOCI for the three months ended March 31, 2021 and 2020 was as follows:

Gain (Loss) Recognized in Other Comprehensive Income

3 Months Ended September 30,

9 Months Ended September 30,

3 Months Ended March 31,

Cross-currency swaps

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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 nine months ended September 30, 2020 and 2019:

(Loss) Gain Reclassified

(Loss) Gain Recognized in OCI

from AOCI into Income

3 Months Ended September 30,

Location of (Loss) Gain Reclassified

3 Months Ended September 30,

from AOCI into Income

Cross-currency swaps

Interest and other expenses (income), net

(Loss) Gain Reclassified

(Loss) Gain Recognized in OCI

Gain (Loss) Reclassified

Gain (Loss) Recognized in OCI

from AOCI into Income

9 Months Ended September 30,

Location of (Loss) Gain Reclassified

9 Months Ended September 30,

3 Months Ended March 31,

Location of Gain (Loss) Reclassified

3 Months Ended March 31,

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

Interest and other expenses, net

We expect the net amount of pre-tax derivative gains included in AOCI at March 31, 2021 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.

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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 nine months ended September 30, 2020 was as follows:

Location of Gain

Amount of Gain 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 months ended March 31, 2021 was as follows:

Location of Gain (Loss)

Amount of Gain (Loss) Recognized in Income

Recognized in Income

3 Months Ended September 30,

9 Months Ended September 30,

3 Months Ended March 31,

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 September 30, 2020 and December 31, 2019:

September 30,

Interest and other expenses, 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, 2021 and December 31, 2020:

Balance Sheet Location

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Prepaid expenses and other assets

Instruments not designated as hedges:

Foreign currency forward contracts

Accounts receivable, net

Total instruments

September 30,

Balance Sheet Location

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Accrued liabilities

Instruments not designated as hedges

Foreign currency forward contracts

Accrued liabilities

Total instruments

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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 $ 1,092.8 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.

The fair value of the Euro-denominated notes, as observable at commonly quoted intervals (Level 2 inputs), was $ 1,112.2 and $ 1,159.1 as of March 31, 2021 and December 31, 2020, respectively, compared to a carrying value of $ 1,051.1 and $ 1,094.5 , respectively.

Our deferred compensation plan assets were $ 128.6 and $ 119.4 as of March 31, 2021 and December 31, 2020, 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).

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The components of lease expense were as follows:

Three Months Ended September 30,

9 Months Ended September 30,

3 Months Ended March 31,

Operating lease expense

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Other information related to leases was as follows:

9 Months Ended September 30,

3 Months Ended March 31,

Supplemental Cash Flow Information

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Operating ROU assets obtained in exchange for lease obligations

September 30,

Supplemental Balance Sheet Information

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Operating leases

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

Maturities of operating lease liabilities as of March 31, 2021 were as follows:

(In millions)

Period Ending September 30, 2020

Period Ending March 31, 2021

Operating Leases

4 unchanged sentences

(15) Segment Data

Effective January 1, 2020, our segment reporting was realigned due to our Right Management business being combined with each of our respective country business units.

Accordingly, our former reportable segment, Right Management, is now reported within each of our respective reportable segments.

All previously reported results have been restated to conform to the current year presentation.

We are organized and managed primarily on a geographic basis.

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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.

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

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.

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 September 30,

9 Months Ended September 30,

3 Months Ended March 31,

Revenues from services:

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Corporate expenses

Goodwill impairment charges

Intangible asset amortization expense

Operating profit

Interest and other (expenses) income, net

Interest and other expenses, net

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.

In the United States, revenues from services included fees received from the related franchise offices of $ 3.1 and $ 3.0 for the three months ended March 30, 2021 and 2020, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 117.5 and $ 76.5 for the three months ended March 31, 2021 and 2020, respectively.

Our consolidated revenues from services include fees received from our franchise offices of $ 3.6 and $ 3.3 for the three months ended March 31, 2021 and 2020, respectively.

These fees are primarily based on revenues generated by the franchise offices, which were $ 249.1 and $ 82.3 for the three months ended March 31, 2021 and 2020, 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.

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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