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Item 2. Management’s Discussion and Analysis

2021-05-07 compared with 2020-11-06 · 165 added, 372 removed, 98 unchanged (85% of the section changed)

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Forward-Looking Statements

This Quarterly Report on Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, (each a "forward-looking statement").

Statements made in this quarterly report that are not statements of historical fact are forward-looking statements.

In addition, from time to time, we and our representatives may make statements that are forward-looking.

All forward-looking statements involve risks and uncertainties.

The information in Item 1A.

- Risk Factors in our annual report on Form 10-K for the year ended December 31, 2019 and in Part II, Item 1A.

Risk Factors in our quarterly report on Form 10-Q for the quarter ended March 31, 2020, which information is incorporated herein by reference, provide cautionary statements identifying, for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, important factors that could cause our actual results to differ materially from those contained in the forward-looking statements.

Forward-looking statements are based on management’s current assumptions and expectations and are subject to risks and uncertainties that are beyond our control and may cause actual results to differ materially from those contained in the forward-looking statements.

Forward-looking statements can be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “may,” “believe,” “seek,” “estimate,” and other similar expressions.

Some or all of the factors identified in our annual report on Form 10-K and in Part II, Item 1A.

- Risk Factors in our quarterly report on Form 10-Q for the quarter ended March 31, 2020, may be beyond our control.

Other risks and uncertainties include, but are not limited to, the following:

the financial and operational impacts of the COVID-19 pandemic and related economic conditions and the Company’s efforts to respond to such impacts, including the possibility that lockdown restrictions that were eased during the second quarter of 2020 in many countries may be reinstated if the spread of the coronavirus accelerates;

changes in tax legislation in places we do business;

challenges in operating our business in certain European markets;

Important factors that could cause our actual results to differ materially from those contained in the forward-looking statements include, among others, the risk factors discussed in Item 1A – Risk Factors in our annual report on Form 10-K for the year-ended December 31, 2020, which information is incorporated herein by reference.

Other risks and uncertainties include, but are not limited to, the impacts of the COVID-19 pandemic and related economic conditions and the Company’s efforts to respond to such impacts, including the possibility of additional lockdown restrictions;

changes in labor and tax legislation in places we do business;

failure to implement strategic technology investments;

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Improving economic growth typically results in increasing demand for labor, resulting in greater demand for our staffing services while demand for our outplacement services typically declines.

During periods of increased demand, we are generally able to improve our profitability and operating leverage as our cost base can support some increase in business without a similar increase in selling and administrative expenses.

By contrast, during periods of decreased demand, as we experienced in the third quarter of 2020 when compared to the prior year, our operating profit is generally impacted unfavorably as we experience a deleveraging of selling and administrative expenses, which may not decline at the same pace as revenues.

Our third quarter results were negatively impacted by the COVID-19 crisis, with revenues declining 12.7% during the quarter.

The pandemic reduced demand for our services across almost all of our operations.

We believe we have seen some signs of a global recovery as the third quarter progressed with our results reflecting a stronger market environment.

At the beginning of the 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 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.

The ultimate impact may depend on multiple factors which cannot be predicted, including public health conditions and the possibility of local and national governments enforcing new restrictions on commerce, which could have an adverse impact on our business, or, conversely the prospect of additional fiscal stimulus packages, which could be beneficial.

What started as a sudden and swift slowdown of the global economies and labor markets is expected to take longer to recover around the world than we had initially contemplated.

We currently anticipate a two-tiered recovery with certain industries recovering quicker in the near term and other industries continuing to be impacted in the medium- to long-term.

During periods of increased demand, as we experienced in the first quarter of 2021, we are generally able to improve our profitability and operating leverage as our cost base can support some increase in business without a similar increase in selling and administrative expenses.

By contrast, during periods of decreased demand, our operating profit is generally impacted unfavorably as we experience a deleveraging of selling and administrative expenses, which may not decline at the same pace as revenues.

During the first quarter of 2021, we continued to see some recovery in the majority of our markets as we began to anniversary the significant COVID-19 related declines in our results that occurred during the last two weeks of the first quarter of 2020.

Revenues increased 6.6% during the first quarter of 2021 compared to the year-earlier period.

Our first quarter results reflect a stronger market environment and increased demand for our services in many of our key markets.

Overall, we saw an increasing monthly rate of recovery as the quarter progressed, although the pandemic continued to limit the demand for our services across almost all of our operations.

Furthermore, the recovery we experienced was not uniform, with some markets, particularly in Europe, continuing to experience COVID-19 related challenges.

These challenges included the imposition of additional or extended lockdowns or other restrictions, which have impaired the rate of recovery.

These restrictions have continued into the second quarter of 2021 and we expect to encounter targeted and localized lockdowns into the future.

Although continued uncertainty remains as to the future impact of the pandemic on global and local economies, we have experienced strengthening demand across geographies and industries during the quarter and we expect the recovery will continue to move in a positive direction.

In addition to the impact from COVID-19 discussed above, results for the quarter were impacted by currency.

During the third quarter of 2020, the United States dollar was weaker, on average, relative to the currencies in all of our markets, except in Other Americas, which therefore had a favorable impact on our reported results and generally may overstate the performance of our underlying

The changes in the foreign currency exchange rates had a 1.8 % favorable impact on revenues from services and no impact on net earnings per share – diluted in the quarter.

Substantially all of our subsidiaries derive revenues from services and incur expenses within the same currency and generally do not have cross-currency transactions, and therefore, changes in foreign currency exchange rates primarily impact reported earnings and not our actual cash flow unless earnings are repatriated.

During the first quarter of 2021, the United States dollar was weaker, on average, relative to the currencies in all of our markets, except in Other Americas, which therefore had a favorable impact on our reported results and generally may overstate the performance of our underlying business.

The changes in the foreign currency exchange rates had a 6.0% favorable impact on revenues from services and an approximately $0.06 per share favorable impact on net earnings per share – diluted in the quarter.

are repatriated.

To understand the performance of our underlying business, we utilize constant currency or organic constant currency variances for our consolidated and segment results.

During the three months ended September 30, 2020, our businesses experienced improvement in year-over-year revenue trends from the second quarter reflecting a stronger market environment and early signs of a global recovery.

Our consolidated revenues were down 14.5% year-over-year in constant currency in the quarter, an improvement from the 28.0% year-over-year constant currency decrease in the second quarter of 2020.

After adjusting for billing days, our organic constant currency revenue year-over-year decrease was 14.9% in the third quarter of 2020 compared to a 26.6% decrease in the second quarter of 2020.

Although the most dramatic revenue declines occurred in the second quarter, as European governments imposed states of emergency and related lockdowns, we continued to experience revenue declines during the third quarter on a year-over-year basis as regional economies remained at reduced activity levels as a result of COVID-19.

We experienced a gradual improvement in the rates of decline throughout the third quarter of 2020 with monthly year-over-year revenue declines of 18% in July, 16% in August, and 9% in September.

The progressive improvement in the rate of year-over-year revenue decline during the quarter reflects the continued increase in activity levels since the reopening of economies largely in May as governments in some of our largest countries lifted lock-down requirements.

We experienced a 25.1% decrease (-26.9% in constant currency and -27.0% in organic constant currency) in our permanent recruitment business in the third quarter of 2020 compared to 2019 as a result of the COVID-19 crisis.

On an overall basis, our Talent Solutions business, which includes Recruitment Process Outsourcing (RPO), TAPFIN - Managed Service Provider (MSP) and our Right Management offerings, experienced a decline in the quarter, which was driven by RPO activity.

We experienced a sharp reduction in RPO activity as many client programs continued their hiring freezes initiated in the second quarter due to the COVID-19 crisis, although we did see improvement in the rate of year-over-year revenue decline from the second quarter.

Our MSP business has been resilient during the crisis and experienced growth during the quarter as we assisted more clients to develop customized workforce solutions during the economic downturn.

Our Right Management business experienced growth during the quarter driven by the increase demand for our career transition services.

During the third quarter of 2020 compared to 2019, most of our markets experienced revenue declines due to the COVID-19 crisis.

We experienced a revenue decrease in Southern Europe, mainly driven by revenue declines in France and Italy due to the continued impact from the crisis.

We experienced a revenue decrease in Northern Europe due to the declines in all of our key markets as a result of the COVID-19 crisis.

After adjusting for billing days, our organic constant currency decrease in the Americas was 13.0% driven by a decrease in the United States related to the COVID-19 crisis.

After adjusting for billing days, revenues in constant currency decreased 5.4% in APME due to the COVID-19 crisis, partially offset by an increase in Japan due to an increase in demand for our staffing/interim revenues.

Our gross profit margin in the third quarter of 2020 compared to 2019 decreased due to the decrease in our permanent recruitment business as a result of the COVID-19 crisis and the margin decrease in our Proservia managed services business.

The decrease was also due the decline in our staffing/interim margins in the Americas and Northern Europe due to the higher mix of our lower-margin enterprise client business.

The overall gross margin decrease was partially offset by the growth in our higher-margin career transition services within our Right Management business and increases in staffing/interim margins in Southern Europe due to the favorable impact of a direct cost accrual adjustment in France related to a payroll tax audit recorded in the third quarter of 2020 and in APME primarily due to the improvement in Japan.

We recorded $49.9 million of restructuring costs in the third quarter of 2020, comprised of $16.7 million in the Americas, $7.6 million in Southern Europe, $24.1 million in Northern Europe, and $1.5 million in APME.

The restructuring costs were primarily related to real estate optimization and streamlining our operations.

We expect to recover the restructuring costs through cost savings over the next 12 months with full run-rate savings beginning in the first quarter of 2021.

During the three months ended March 31, 2021, our businesses experienced improvement in year-over-year revenue trends from the fourth quarter reflecting a stronger market environment and continued signs of a global recovery.

Our consolidated revenues increased 6.6% year-over-year in the quarter, an improvement from the 2.7% year-over-year decrease in the fourth quarter of 2020.

As we began to anniversary the dramatic revenue declines as a result of the COVID-19 crisis and related lockdowns imposed by the European governments in the prior year period, specifically during the last two weeks of March 2020, we experienced a crossover from revenue declines to revenue growth throughout the first quarter of 2021.

Following a monthly year-over-year revenue decline in January of 4.6% as some seasonal logistics work ended, we saw revenue growth of 3.4% in February and exited the quarter with growth of 22.5% in March.

The progressive improvement from year-over-year revenue declines to revenue growth during the quarter reflects the continued increase in activity levels as the recovery continued to take hold across our key markets during the quarter, including strengthening demand for talent within the manufacturing sectors.

On an overall basis, our Talent Solutions business, which includes Recruitment Process Outsourcing (RPO), TAPFIN - Managed Service Provider (MSP) and our Right Management offerings, experienced an increase in the quarter, which was driven mostly by increased demand for our MSP and RPO services.

Our MSP business has remained resilient during the crisis and we experienced growth during the quarter as we assisted more clients to develop customized workforce solutions during the economic downturn.

As workplaces reopen across our geographies and workers return in phased approaches, we are seeing increased demand for our HR skills within our RPO business as our clients put a greater emphasis on hiring.

During the first quarter of 2021 compared to 2020, most of our markets experienced revenue increases as the recovery continued to progress and as we anniversaried the sharp revenue declines in the last two weeks of March 2020 due to the COVID-19 crisis.

We experienced a revenue increase in Southern Europe, mainly driven by the favorable impact of changes in currency exchange rates and increased demand in Italy.

We experienced a revenue increase in Northern Europe mostly due to the favorable impact of changes in currency exchange rates and the increased demand in the United Kingdom.

Revenues decreased 0.8% in the Americas driven by the decrease in the United States primarily due to the unfavorable impact of one fewer billing day and the unfavorable impact of changes in currency exchange rates in the markets within Other Americas.

We experienced a 5.5% revenue increase in APME mostly from the increase in Japan, which was mainly due to an increase in demand for our staffing/interim revenues.

Our gross profit margin declined in the first quarter of 2021 compared to 2020 primarily due to an unfavorable change in business mix as the higher-margin permanent recruitment business represented a lower percentage of the revenues mix as a result of the COVID-19 crisis.

The decrease was also due to the decline in our staffing/interim margins in the Americas, Southern Europe and Northern Europe as a result of the higher mix of our lower-margin enterprise client business.

These decreases were partially offset by a higher mix of MSP gross profit due to strong growth during the quarter and the increase in staffing/interim margins in APME primarily due to the improvement in Japan.

Our operating profit increased 160.9% in the first quarter of 2021 while our operating profit margin increased 120 basis points compared to the first quarter of 2020.

Excluding the restructuring costs in the prior year, our operating profit was up 14.4% while operating profit margin was up 10 basis points compared to the first quarter of 2020.

The operating profit margin increased as we were able to increase our revenues while experiencing a decrease in our selling and administrative expenses due to the strategic initiatives and strong cost actions put in place in late March and early April of 2020.

We continue to monitor expenses closely to ensure we maintain the benefit of our efforts to optimize our organizational and cost structures, while investing appropriately to support the ability of the business to grow in the future and enhance our productivity, technology and digital capabilities.

Our operating profit decreased 71.6 % in the third quarter of 2020 ( -71.6% in constant currency;

-71.9% in organic constant currency) while our operating profit margin decreased 280 basis points compared to the third quarter of 20 19 .

Excluding the restructuring costs , the loss of $5.8 million from the disposition of our Serbia, Slovenia, Bulgaria, and Croatia businesses incurred in the third quarter of 2020 and the $30.4 million gain related to the deconsolidation of ManpowerGroup Greater China Limited (“Deconsolidation”) in the third quarter of 2019, our operating profit was down 38.4 % in constant currency while operating profit margin was down 100 basis points compared to the third quarter of 2019.

The decrease in operating profit margin reflects the material deleveraging that accompanied the decrease in revenues from the sustained impact of the COVID-19 crisis .

We took significant actions in late March and early April, which allowed us to reduce selling and administrative expenses in our business.

These reductions remained in place during the third quarter of 2020, which partially offset the revenue and gross profit declines during the third quarter.

This included leveraging government unemployment related benefits, which allowed us to move unutilized staff and associates quickly onto these programs, with most of the benefits from these actions occurring in the second quarter.

There were a few programs still in place, mostly in Germany and the Netherlands, in the third quarter from which we were still benefitting.

This also included the short-term action of cutting discretionary costs and scaling operations back.

In addition to these implemented initiatives, we are prepared to take further cost actions to optimize our business structure through this economic downturn with the intention of simultaneously preserving our ability to rebound when market conditions improve.

We are focused on managing costs as efficiently as possible in the short-term while continuing to progress transformational actions aligned with our strategic priorities.

As we manage through this crisis and prepare our business for future opportunities we would also like to emphasize the following points:

Many of our leaders have experience managing through economic downturns, and many of our senior operational leaders previously managed parts of our business during the economic downturn in 2008-2009.

We believe this is valuable experience for the current economic environment.

Additionally, we have enhanced our enterprise risk management framework in recent years, and we have business continuity plans which have been executed at a global, regional and country level.

The technology investments we have been making for the last few years as part of our transformational activities have facilitated a rapid response to the COVID-19 crisis.

As of September 30, 2020, we had approximately [90%] of our full-time equivalent employees working remotely while mitigating potential productivity losses.

We have also extended our cyber and information security capability to accelerate the ability for some of our associates and consultants to work for our clients at home mitigating potential operational or financial losses.

Expectations of when our full-time equivalent employees return to the workplace will depend on a number of factors including the impact such a return would have on the safety, health and well-being of our employees as well as the impact from any government mandates or restrictions.

Our business has benefitted from our diversification across geographies, industries, and offerings, that we believe position us well to endure the COVID-19 crisis.

We believe this diversification may likewise position us to take advantage of market opportunities that present themselves.

For example, during both the third quarter and first nine months of 2020 compared to 2019, we have seen smaller declines within our Experis business compared to the Manpower business, and we are positioned with a large portion of our business focused on providing professional services and Talent Solutions.

We believe our strategy to improve the diversification of our business through the growth of Experis will facilitate growth following the crisis as companies accelerate technology investments.

Additionally, portions of our Talent Solutions business are assisting our clients through this downturn with customized solutions.

Right Management has experienced increased demand for career transition services and has historically been a counter-cyclical business that helps offset the impact of an economic downturn.

Operating Results - Three Months Ended September 30, 2020 and 2019

The following table presents selected consolidated financial data for the three months ended September 30, 2020 as compared to 2019.

Operating Results - Three Months Ended March 31, 2021 and 2020

The following table presents selected consolidated financial data for the three months ended March 31, 2021 as compared to 2020.

(in millions, except per share data)

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Weighted average shares – diluted

The year-over-year decrease in revenues from services of 12.7% (-14.5% in constant currency and -14.7% in organic constant currency) was attributed to:

a revenue decrease in Southern Europe of 10.4% (-14.7% in constant currency).

This included a revenue decrease in France of 13.1% (-17.3% in constant currency), which was primarily due to a decrease in demand for our Manpower staffing services and a 17.5% decrease (-21.6% in constant currency) in the permanent recruitment business, both due to the impact of the COVID-19 crisis.

The decrease also includes a decrease in Italy of 6.8% (-11.3% in constant currency), which was primarily due to the decreased demand for our Manpower staffing services and a 26.1% decrease (-29.7% in constant currency) in the permanent recruitment business, both due to the impact of the COVID-19 crisis, partially offset by the favorable impact of approximately one more billing day;

decreased demand for services in most of our markets within Northern Europe, where revenues decreased 18.8% (-21.6% in constant currency), primarily due to reduced demand for our Manpower staffing services and a 32.9% decrease (-35.9% in constant currency) in the permanent recruitment business, both primarily due to the impact of the COVID-19 crisis.

We experienced revenue declines in the United Kingdom, Germany, the Nordics, the Netherlands and Belgium of 18.3%, 28.0%, 13.2%, 18.6% and 25.3%, respectively (-22.0%, -31.5%, -15.1%, -22.6%, and -29.1%, respectively, in constant currency);

a revenue decrease in the United States of 13.1% (-15.2% on an organic basis) primarily driven by decreased demand for our staffing/interim services and a decrease in our permanent recruitment business of 14.8% (-15.2% on an organic basis), both due to the impacts of the COVID-19 crisis, partially offset by increased demand for our MSP offering and career transition services;

a revenue decrease in APME of 5.4% (-6.0% in constant currency) due to the decline in demand for our staffing/interim services and a decrease in our permanent recruitment business of 15.8% (-18.2% in constant currency), partially offset by an increase in revenues in Japan and an increase in demand for our Talent-Based Outsourcing services within the Manpower business;

The year-over-year increase in revenues from services of 6.6% (0.6% in constant currency and 0.9% in organic constant currency) was attributed to:

a revenue increase in Southern Europe of 11.1% (2.0% in constant currency).

This included a revenue increase in France of 8.7% (-0.5% in constant currency), which was primarily due to the favorable impact of changes in currency exchange rates, partially offset by the unfavorable impact of approximately one fewer billing day.

The increase also includes an increase in Italy of 22.9% (12.5% in constant currency), which was primarily due to the increased demand for our Manpower staffing services, an 18.1% increase (8.1% in constant currency) in the permanent recruitment business and the favorable impact of changes in currency exchange rates, partially offset by the unfavorable impact of approximately one fewer billing day;

a revenue increase in Northern Europe of 6.1% (-2.3 % in constant currency), primarily due to the favorable impact of changes in currency exchange rates, partially offset by the 5.4% decrease (-13.1% in constant currency) in the permanent recruitment business, primarily due to the impact of the COVID-19 crisis.

We experienced revenue increases in the United Kingdom, the Nordics and the Netherlands of 12.4%, 8.4% and 3.7%, respectively (4.0%, -3.9% and -5.1%, respectively, in constant currency).

These increases were partially offset by revenue declines in Germany and Belgium of 9.8% and 6.9%, respectively (-17.4% and -14.8%, respectively, in constant currency);

a revenue increase in APME of 5.5% (0.3% in constant currency) primarily due to the favorable impact of changes in currency exchange rates and the increase in demand for our staffing/interim services in Japan, partially offset by the unfavorable impact of approximately one fewer billing day in the quarter;

partially offset by

a revenue decrease in the United States of 0.3% (-0.7% on an organic basis) primarily driven by decreased demand for our staffing/interim service due to the impacts of the COVID-19 crisis and the unfavorable impact of one fewer billing day.

These decreases were partially offset by an increase in our permanent recruitment business of 14.5% (14.3% on an organic basis) and increased demand for our RPO and MSP offerings;

a 6.0% increase due to the impact of changes in currency exchange rates.

The year-over-year 10 basis point decrease in gross profit margin was primarily attributed to:

a 30 basis point unfavorable impact due to the decrease in our permanent recruitment business of 25.1% (-26.9% in constant currency and -27.0% in organic constant currency);

a 20 basis point unfavorable impact from declines in the staffing/interim margins in the Americas and Northern Europe due to the higher mix of our lower-margin enterprise client business ;

a 10 basis point unfavorable impact from the decrease in margin in our Proservia business primarily related to the lower utilization of consultants in Germany;

a 10 basis point unfavorable change in business mix as the higher-margin permanent recruitment business represented a lower percentage of the revenues mix;

a 10 basis point unfavorable impact from declines in the staffing/interim margins in the Americas , Southern Europe and Northern Europe due to the higher mix of our lower-margin enterprise client business ;

partially offset by

a 20 basis point favorable impact from the growth in our higher-margin career transition services within our Right Management business;

a 20 basis point favorable impact from staffing/interim margin increases in the Southern Europe due to the favorable impact of a direct cost accrual adjustment in France related to a payroll tax audit recorded in the third quarter of 2020 and APME primarily due to the improvement in Japan.

The 6.5% increase in selling and administrative expenses in the third quarter of 2020 (4.1% in constant currency;

a 10 basis point favorable impact from the growth in our higher-margin MSP services within our Talent Solutions business.

The 2.4 % decrease in selling and administrative expenses in the first quarter of 2021 (-7.5% in constant currency;

-7.2% in organic constant currency) was primarily attributed to:

restructuring costs of $49.9 million incurred in the third quarter of 2020;

the $30.4 million gain related to the Deconsolidation in the third quarter of 2019;

the $5.8 million loss on the disposition of subsidiaries in the third quarter of 2020;

the additional recurring selling and administrative costs of $1.5 million incurred as a result of the franchise acquisitions in the United States in August and October 2019;

restructuring costs of $48.2 million incurred in the first quarter of 2020;

a 0.4% decrease (-5.7% in constant currency and -5.5% in organic constant currency) in non-personnel related costs, excluding restructuring costs, primarily driven by a reduction in discretionary expenses and a decline in office-related expenses due to a decrease in the number of offices;

partially offset by

a 5.1% increase due to the impact of changes in currency exchange rates;

a 7.7% increase (2.1% in constant currency and 2.3% in organic constant currency) in personnel costs due to the increase in variable incentive costs as a result of an increase in profitability in most markets.

Selling and administrative expenses as a percent of revenues decreased 130 basis points in the first quarter of 2021 compared to the first quarter of 2020 due primarily to:

a 100 basis point favorable impact as a result of the decrease in restructuring costs from $48.2 million in the first quarter of 2020 to zero in the first quarter of 2021;

a 30 basis point favorable impact due to the decrease in non-personnel related costs, excluding restructuring costs;

a 10 basis point favorable impact from changes in currency exchange rates;

partially offset by

a 6.4% decrease (-8.3% in constant currency and -8.6% in organic constant currency) in personnel costs due to a reduction of salary-related costs as a result of lower headcount and a decrease in variable incentive costs due to a decline in profitability in most markets;

an 8.2% decrease (-10.2% in constant currency and -10.3% in organic constant currency) in non-personnel related costs, excluding restructuring costs, loss from the disposition of subsidiaries and gain related to the Deconsolidation, due to cost management actions taken across all segments as a result of revenue declines.

Selling and administrative expenses as a percent of revenues increased 260 basis points in the third quarter of 2020 compared to the third quarter of 2019 due primarily to:

a 110 basis point unfavorable impact from restructuring costs in the third quarter of 2020;

a 70 basis point unfavorable impact from expense deleveraging, excluding restructuring costs, the loss on the disposition of subsidiaries and the gain related to the Deconsolidation, as we were unable to decrease selling and administrative expenses at the same rate as our revenue decline;

a 60 basis point unfavorable impact from the gain related to the Deconsolidation in the third quarter of 2019;

a 10 basis point unfavorable impact from the loss on disposition of subsidiaries in the third quarter of 2020;

a 10 basis point unfavorable impact from changes in currency exchange rates.

a 10 basis point unfavorable impact from the increase in variable incentive costs.

Interest and other expenses, net is comprised of interest, foreign exchange gains and losses and other miscellaneous non-operating income and expenses, including noncontrolling interests.

Interest and other expenses, net was $6.0 million in the third quarter of 2020 compared to $12.2 million in the third quarter of 2019.

Net interest expense decreased $3.6 million in the third quarter of 2020 to $7.7 million from $11.3 million in the third quarter of 2019 primarily due to an increase interest income as a result of higher cash balances.

Miscellaneous income was $2.3 million in the third quarter of 2020 compared to $3.2 million in the third quarter of 2019.

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 not 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.

The COVID-19 crisis has created uncertainty in predicting future earnings before income taxes and its impact to the third quarter of 2020 along with quarterly effective tax rates for future quarters may be material.

Net earnings per share - diluted was $0.18 in the third quarter of 2020 compared to $2.42 in the third quarter of 2019.

Restructuring costs recorded in the third quarter of 2020 negatively impacted net earnings per share - diluted by approximately $0.72 in the third quarter of 2020.

The loss from the disposition of subsidiaries in the third quarter of 2020 negatively impacted net earnings per share – diluted by approximately $0.09 in the third quarter of 2020.

The gain from the ManpowerGroup Greater China Limited IPO recorded in the third quarter of 2019 positively impacted net earnings per share – diluted by approximately $0.50 per share in the third quarter of 2019.

Weighted average shares - diluted decreased to 58.5 million in the third quarter of 2020 from 60.3 million in the third quarter of 2019.

This decrease was due to the impact of share repurchases completed since the third quarter of 2019 and the full weighting of the repurchases completed in the third quarter of 2019, partially offset by shares issued as a result of exercises and vesting of share-based awards since the third quarter of 2019.

Operating Results – Nine months ended September 30, 2020 and 2019

(in millions, except per share data)

Revenues from services

Cost of services

Gross profit margin

Selling and administrative expenses, excluding goodwill impairment charges

Goodwill impairment charges

Selling and administrative expenses

Operating profit

Operating profit margin

Interest and other expenses (income), net

Earnings before income taxes

Provision for income taxes

Effective income tax rate

Net (loss) earnings

Net (loss) earnings per share – diluted

Weighted average shares – diluted

The year-over-year decrease in revenues from services of 17.4% (-16.4% in constant currency and -16.0% in organic constant currency) was attributed to:

a revenue decrease in Southern Europe of 19.4% (-19.9% in constant currency;

-21.2% in organic constant currency).

This included a revenue decrease in France of 26.3% (-26.6% in constant currency), which was primarily due to a decrease in our Manpower staffing services and a 25.5% decrease (-25.4% in constant currency) in the permanent recruitment business, both due to the impact of the COVID-19 crisis.

The decrease also includes a decrease in Italy of 16.0% (-16.2% in constant currency), which was primarily due to the decreased demand for our Manpower staffing services and a 34.2% decrease (-34.0% in constant currency) in the permanent recruitment business, both due to the impact of the COVID-19 crisis;

decreased demand for services in most of our markets within Northern Europe, where revenues decreased 19.1 % (- 17.9 % in constant currency;

- 17.7 % in organic constant currency), primarily due to reduced demand for our Manpower staffing services and a 32.1 % decrease (- 31.3 % in constant currency) in the permanent recruitment business as a result of the impact of the COVID-19 crisis.

We experienced revenue declines in the United Kingdom, Germany, the Nordics, the Netherlands and Belgium of 14.9 %, 26.1 %, 19.1 %, 21.9 % and 27.7 % , respectively (- 14.7 %, - 26.0 %, - 15.3 %, - 21.9 %, and - 27.8 %, respectively, in constant currency);

a revenue decrease in the United States of 12.2% (-14.5% on an organic basis) primarily driven by a decline in demand for our Manpower staffing services and a 13.8% (-14.3% on an organic basis) decrease in the permanent recruitment business, both due to the impact of the COVID-19 crisis, partially offset by an increase in our Talent Solutions business, primarily within our MSP offering and career transition services;

a revenue decrease in APME of 14.2% (-13.3% in constant currency;

-2.8% in organic constant currency) due to the Deconsolidation, partially offset by an increase in revenues in Japan and an increase in demand for our Talent-Based Outsourcing services within the Manpower business;

a 1.0% decrease due to the impact of changes in currency exchange rates.

The year-over-year 50 basis point decrease in gross profit margin was primarily attributed to:

a 30 basis point unfavorable impact due to the decrease in our permanent recruitment business of 28.1% (-27.2% in constant currency and -23.9% in organic constant currency);

a 20 basis point unfavorable impact due to the margin decrease in our Proservia business primarily related to the lower utilization of consultants in Germany;

a 10 basis point unfavorable impact from a deterioration in our staffing/interim margin in the Americas, Southern Europe, and Northern Europe due to the higher mix of our lower-margin enterprise client business and higher rates of sickness and absenteeism in certain countries and increased direct costs associated with early termination of client contracts during the COVID-19 crisis.

These unfavorable impacts were partially offset by reduced direct costs in certain countries due to government crisis response programs, a direct cost accrual adjustment in France related to a payroll tax audit recorded in the first nine months of 2020, our execution of various bill/pay yield initiatives due to the COVID-19 crisis;

partially offset by

a 10 basis point favorable impact by growth in our higher-margin MSP offering and career transition services.

The 4.2% decrease in selling and administrative expenses in the nine months ended September 30, 2020 (-3.3% in constant currency;

-2.4% in organic constant currency) was primarily attributed to:

a 10.7% decrease (-9.8% in constant currency and -8.8% in organic constant currency) in personnel costs due to a reduction of salary-related costs as a result of lower headcount and a decrease in variable incentive costs due to a decline in profitability in most markets, and the benefits related to the transition of full-time equivalent employees onto government temporary unemployment programs that mostly occurred in the second quarter of 2020;

a 6.7% decrease (-5.8% in constant currency and -5.0% in organic constant currency) in non-personnel related costs, excluding goodwill and other impairment charges, restructuring costs, loss on disposition of subsidiaries, and gain related to Deconsolidation, due to cost management actions taken across all segments as a result of revenue declines;

the reduction in recurring selling and administrative costs of $36.5 million as a result of the Deconsolidation in July 2019;

a 0.9% decrease due to the impact of changes in currency exchange rates;

partially offset by

an increase in restructuring costs to $98.1 million incurred in the nine months ended September 30, 2020 from $39.8 million incurred in the nine months ended September 30, 2019;

the $30.4 million gain related to the Deconsolidation in the nine months ended September 30, 2019;

the additional recurring selling and administrative costs of $17.9 million incurred as a result of the acquisition of Manpower Switzerland in Southern Europe and franchise acquisitions in the United States in August and October 2019;

the increase in goodwill and other impairment charges to $72.8 million in the nine months ended September 30, 2020 from $65.6 million in the nine months ended September 30, 2019;

the $5.8 million loss on the disposition of subsidiaries in the nine months ended September 30, 2020.

Selling and administrative expenses as a percent of revenues increased 210 basis points in the nine months ended September 30, 2020 compared to the first nine months of 2019 due primarily to:

a 120 basis point unfavorable impact from expense deleveraging, excluding goodwill and other impairment charges, restructuring costs, loss on disposition of subsidiaries, and gain related to Deconsolidation, as we were unable to decrease selling and administrative expenses at the same rate as our revenue decline;

a 50 basis point unfavorable impact from the increase in restructuring costs in the nine months ended September 30, 2020 compared to 2019;

a 20 basis point unfavorable impact from the gain related to the Deconsolidation in the nine months ended September 30, 2019;

a 10 basis point unfavorable impact from the increase in goodwill and other impairment charges;

a 10 basis point unfavorable impact from changes in currency exchange rates.

Interest and other expenses (income), net is comprised of interest, foreign exchange gains and losses and other miscellaneous non-operating income and expenses, including noncontrolling interests.

Interest and other expenses (income), net was expense of $32.3 million in the nine months ended September 30, 2020 compared to income of $46.1 million in the nine months ended September 30, 2019.

Net interest expense decreased $7.7 million in the nine months ended September 30, 2020 to $22.4 million from $30.1 million in the nine months ended September 30, 2019 primarily due to an increase in interest income as a result of higher cash balances.

Miscellaneous expense (income), net was an expense $5.7 million in the nine months ended September 30, 2020 compared to income of $82.7 million in the nine months ended September 30, 2019.

The change is primarily due to the $80.4 million from the acquisition of Manpower Switzerland in the nine months ended September 30, 2019, the pension settlement expense of $10.2 million recorded in the nine months ended September 30, 2020 and the decrease in noncontrolling interest expense as a result of a decrease in earnings in a joint venture in Germany.

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.

Net (loss) earnings per share - diluted was a loss of $0.90 in the nine months ended September 30, 2020 compared to earnings of $5.40 in the nine months ended September 30, 2019.

Foreign currency exchange rates unfavorably impacted net (loss) earnings per share - diluted by approximately $0.01 per share in the nine months ended September 30, 2020.

Restructuring costs recorded in the nine months ended September 30, 2020 and 2019 negatively impacted net (loss) earnings per share – diluted by approximately $1.40 and $0.52 per share, net of tax, in the nine months ended September 30, 2020 and 2019, respectively.

Goodwill and other impairment charges recorded in the nine months ended September 30, 2020 and 2019 negatively impacted net earnings per share - diluted by approximately $1.14 and $1.08 per share in the nine months ended September 30, 2020 and 2019, respectively.

The pension settlement expense recorded in the nine months ended September 30, 2020 negatively impacted net loss per share – diluted by approximately $0.11, net of tax, in the nine months ended September 30, 2020.

The loss from the disposition of subsidiaries in the nine months ended September 30, 2020 negatively impacted net earnings per share – diluted by approximately $0.09, net of tax, in the nine months ended September 30, 2020.

The gain from the acquisition of Manpower Switzerland recorded in the nine months ended September 30, 2019 positively impacted net earnings per share – diluted by approximately $1.33 per share in the nine months ended

September 30, 2019 .

The gain from the D econsolidation recorded in the nine months ended September 30, 2019 positively impacted net earnings per share – diluted by approximately $0.50 per share in the nine months ended September 30, 2019.

Weighted average shares - diluted decreased to 58.4 million in the nine months ended September 30, 2020 from 60.6 million in the nine months ended September 30, 2019.

This decrease was due to the impact of share repurchases completed since September 30, 2019 and the full weighting of the repurchases completed in the nine months ended September 30, 2019, partially offset by shares issued as a result of exercises and vesting of share-based awards since September 30, 2019.

Interest and other expenses, net was $5.4 million in the first quarter of 2021 compared to $20.5 million in the first quarter of 2020.

Net interest expense decreased $0.3 million in the first quarter of 2021 to $7.1 million from $7.4 million in the first quarter of 2021.

Miscellaneous income was $4.2 million in the first quarter of 2021 compared to miscellaneous expense of $10.0 million in the first quarter of 2020.

The change is primarily due to the pension settlement expenses of $10.2 million recorded in the first quarter of 2020 related to one of our United States plans, the increase in income from our equity investment in ManpowerGroup Greater China Limited, and the increase in the returns on pension plan assets.

We recorded income tax expense at an effective rate of 33.3% for 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.

The COVID-19 crisis is creating uncertainty around predicting future earnings, and that uncertainty could make it more difficult for us to accurately estimate tax rates into the future.

Net earnings per share - diluted was $1.11 in the first quarter of 2021 compared to $0.03 in the first quarter of 2020.

Foreign currency exchange rates favorably impacted net earnings per share - diluted by approximately $0.06 per share in the first quarter of 2021.

Restructuring costs recorded in the first quarter of 2020 negatively impacted net earnings per share – diluted by approximately $0.68 per share, net of tax, in the first quarter of 2020.

The pension settlement expense recorded in the first quarter of 2020 negatively impacted net earnings per share – diluted by approximately $0.11, net of tax, in the first quarter of 2020.

Weighted average shares - diluted decreased to 55.7 million in the first quarter of 2021 from 59.0 million in the first quarter of 2020.

This decrease was due to the impact of share repurchases completed since the first quarter of 2020 and the full weighting of the repurchases completed in the first quarter of 2021.

Segment Operating Results

In the Americas, revenues from services decreased 15.1% (-11.2% in constant currency;

-12.5% in organic constant currency) in the third quarter of 2020 compared to 2019.

In the United States, revenues from services decreased 13.1% (-15.2% on an organic basis) in the third quarter of 2020 compared to 2019, primarily driven by decreased demand for our staffing/interim services and a decrease in our permanent recruitment business of 14.8% (-15.2% on an organic basis), both due to the impacts of the COVID-19 crisis.

These decreases in the United States were partially offset by increased demand for our MSP offering as well as increased demand for career transition services, within our Right Management business.

In Other Americas, revenues from services decreased 18.2% (-8.2% in constant currency) in the third quarter of 2020 compared to 2019 primarily due to the impacts of the COVID-19 crisis.

This decline was driven by decreases in Mexico, Canada, Peru, Colombia and Brazil of 20.0%, 11.2%, 25.1%, 42.8%, and 12.2%, respectively (-9.1%, -10.4%, -20.6%, -36.1% and increase of 18.9%, respectively, in constant currency).

These decreases were offset by an increase in Argentina of 7.9% (58.1% in constant currency) primarily due to inflation.

In the Americas, revenues from services decreased 13.0% (-9.0% in constant currency, -10.4% in organic constant currency) in the nine months ended September 30, 2020 compared to 2019.

In the United States, revenues from services decreased 12.2% (-14.5% on an organic basis) in the nine months ended September 30, 2020 compared to 2019, primarily driven by decreased demand for our Manpower staffing services and a decrease in our permanent recruitment business of 13.8% (-14.3% on an organic basis), both due to the impacts of the COVID-19 crisis.

These decreases in the United States were partially offset by increased demand for our MSP offering and career transition services.

In Other Americas, revenues from services decreased 14.4% (-4.2% in constant currency) in the nine months ended September 30, 2020 compared to 2019 primarily due to the impacts of the COVID-19 crisis.

This decline was driven by decreases in Mexico, Canada, Argentina, Peru, Colombia and Brazil of 16.6%, 4.4%, 2.9%, 16.3%, 34.0% and 21.5%, respectively (-6.6%, -2.7%, increase of 48.5%, -13.2%, -24.9% and increase of 1.9%, respectively, in constant currency).

The constant currency increase in Argentina was primarily due to inflation.

Gross profit margin increased in both the third quarter and the nine months ended September 30, 2020 compared to 2019 primarily due to gross profit margin increases in the United States from the increase in revenues from our higher-margin career transition services and MSP offering.

This increase was partially offset by the decreases in our permanent recruitment business of 20.0% and 17.6%, respectively (-18.6% and -16.2%, respectively, in constant currency) and declines in the staffing/interim margin due to client mix changes, as a higher percentage of revenues came from our lower margin enterprise clients.

In the third quarter of 2020, selling and administrative expenses increased 0.8% (3.4% in constant currency and 2.5% in organic constant currency), primarily due to the increase in restructuring costs to $16.7 million in the third quarter of 2020 compared to zero in the third quarter of 2019 and the additional recurring selling and administrative costs incurred as a result of the franchise acquisitions in the United States in August and October 2019.

These increases were partially offset by the decrease in salary-related costs, because of lower headcount, and discretionary expenses.

Selling and administrative expenses increased 0.3% (3.0% in constant currency and 1.9% in organic constant currency) in the nine months ended September 30, 2020 compared to 2019, primarily due to the increase in restructuring costs to $29.5 million in the first nine months of 2020 compared to $9.8 million in the first nine months of 2019, the impairment charge of $6.0 million recorded in the United States related to capitalized software in the first nine months of 2020, a bad debt expense and a state sales tax related charge incurred in the first nine months of 2020, and the additional recurring selling and administrative costs incurred as a result of the franchise acquisitions in the United States.

These increases were partially offset by decreases in salary-related costs, due to lower headcount, and discretionary expenses.

Operating Unit Profit (“OUP”) margin in the Americas was 3.4% and 5.4% for the third quarter of 2020 and 2019, respectively.

In the United States, OUP margin decreased to 3.3% in the third quarter of 2020 from 6.0% in 2019 primarily due to the increase in

restructuring costs and expense deleveraging, as we were unable to decrease expenses at the same rate as the accelerated revenue decline due to the COVID-19 crisis , partially offset by the increase in the gross profit margin.

Other Americas OUP margin decreased to 3.5% in the third quarter of 2020 from 4.6% in the third quarter of 2019 due primarily to the decrease in the gross profit margin, increase in restructuring costs and expense deleveraging.

OUP margin in the Americas was 2.4% and 4.6% for the nine months ended September 30, 2020 and 2019, respectively.

In the United States, OUP margin decreased to 1.8% for the nine months ended September 30, 2020 from 4.8% in 2019 primarily due to the increase in restructuring costs, the software impairment charge and expense deleveraging.

These decreases were partially offset by the increase in the gross profit margin.

Other Americas OUP margin decreased to 3.5% for the nine months ended September 30, 2020 from 4.2% in 2019 primarily due to a decline in the gross profit margin and expense deleveraging.

In the Americas, revenues from services decreased 0.8% (increase of 1.1% in constant currency and 0.8% in organic constant currency) in the first quarter of 2021 compared to the first quarter of 2020.

In the United States, revenues from services decreased 0.3% (-0.7% on an organic basis) in the first quarter of 2021 compared to the first quarter of 2020, primarily driven by decreased demand for our staffing/interim services due to the impacts of the COVID-19 crisis and the unfavorable impact of one fewer billing day during the quarter.

The decreased demand for staffing/interim services in the United States was partially offset by increased demand for our MSP and RPO offerings along with a 14.5% increase (14.3% in organic constant currency) in our permanent recruitment business.

In Other Americas, revenues from services decreased 1.5% (increase of 3.3% in constant currency) in the first quarter of 2021 compared to the first quarter of 2020 primarily due to the unfavorable impact of changes in currency exchange rates.

This decline was driven by decreases in Mexico, Colombia and Peru of 5.8%, 19.0% and 14.8%, respectively (-3.6%, -18.4% and -8.3%, respectively, in constant currency).

These decreases were partially offset by increases in Argentina, Canada and Brazil of 25.2%, 8.1% and 15.7%, respectively (80.3%, 1.7% and 42.3%, respectively, in constant currency).

The increase in Argentina was primarily due to inflation.

Gross profit margin increased in the first quarter of 2021 compared to the first quarter of 2020 primarily due to gross profit margin increases in the United States from the increase in revenues from our higher-margin MSP and RPO offerings as well as the increase in our permanent recruitment business of 14.3% (15.4% in constant currency;

15.3% in organic constant currency).

This increase was partially offset by the declines in the staffing/interim margin due to client mix changes, particularly in the United States, as a higher percentage of revenues came from our lower margin enterprise clients.

In the first quarter of 2021, selling and administrative expenses decreased 11.5% (-10.3% in constant currency and -10.5% in organic constant currency), primarily due to the decrease in restructuring costs to zero in the first quarter of 2021 compared to $12.8 million in the first quarter of 2020, the decrease in discretionary expenses and a decline in office-related expenses driven by a decrease in the number of offices.

The decreases were partially offset by the increase in salary-related costs due to higher headcount in the quarter and an increase in variable incentive costs as a result of an increase in profitability in certain markets.

Operating Unit Profit (“OUP”) margin in the Americas was 4.4% and 1.6% for the first quarter of 2021 and 2020, respectively.

In the United States, OUP margin increased to 4.8% in the first quarter of 2021 from 0.4% in the first quarter of 2020 primarily due to the decrease in restructuring costs and an increase in the gross profit margin.

Other Americas OUP margin increased to 3.8% in the first quarter of 2021 from 3.6% in the first quarter of 2020 primarily due to the decrease in restructuring costs, partially offset by the decrease in the gross profit margin.

On April 23, 2021, new legislation was enacted in Mexico that will prohibit the provision of traditional temporary staffing services, only allowing outsourced worker assignments for specialized services outside of the client’s core business activity.

The effective date for the new law is July 23, 2021.

We are currently assessing the magnitude of the impact that this new legislation will have on our Mexico business pending the issuance of the final implementation and transition rules.

We expect that the new legislation will reduce revenues and operating unit profit within our Mexico operations.

Our Mexico operations approximated 2.8% of our consolidated revenues for the year ended December 31, 2020.

Southern Europe

In Southern Europe, which includes operations in France and Italy, revenues from services decreased 10.4% (-14.7% in constant currency) in the third quarter of 2020 compared to 2019.

In the third quarter of 2020, revenues from services decreased 13.1% (-17.3% in constant currency) in France (which represents 57% of Southern Europe’s revenues) and decreased 6.8% (-11.3% in constant currency) in Italy (which represents 17% of Southern Europe’s revenues), with both experiencing improvement in the rate of revenue decline as the third quarter progressed.

The decrease in France is primarily due to decreased demand for our Manpower staffing services and a 17.5% decrease (-21.6% in constant currency) in the permanent recruitment busines s, both due to the impact of the COVID-19 crisis.

The decrease in Italy was primarily due to the decreased demand for our Manpower staffing services and a 26.1% decrease (-29.7% in constant currency) in the permanent recruitment business, both due to the impact of the COVID-19 crisis, partially offset by the favorable impact of approximately one more billing day.

In Other Southern Europe, revenues from services decreased 6.5% (-10.7% in constant currency) during the third quarter of 2020 compared to 2019, due to decreased demand for our Manpower staffing services and a decrease in our permanent recruitment business of 43.2% (-45.0% in constant currency), both due to the impact of the COVID-19 crisis.

Revenues from services decreased 19.4% (-19.9% in constant currency) in the nine months ended September 30, 2020 compared to 2019.

In the nine months ended September 30, 2020, revenues from services decreased 26.3% (-26.6% in constant currency) in France and decreased 16.0% (-16.2% in constant currency) in Italy.

The decrease in France is due to decreased demand for our Manpower staffing services and a 25.5% (-25.4% in constant currency) decrease in our permanent recruitment business, both due to the impact of the COVID-19 crisis.

The decrease in Italy was primarily due to decreased demand for our Manpower staffing services and a 34.2% (-34.0% in constant currency) decrease in our permanent recruitment business, both due to the impact of the COVID-19 crisis.

In Other Southern Europe, revenues from services decreased 4.3% (-5.3% in constant currency) during the nine months ended September 30, 2020 compared to 2019, due to decreased demand for our Manpower staffing services and a decrease in our permanent recruitment business of 33.7% (-33.7% in constant currency), both due to the impact of the COVID-19 crisis.

Gross profit margin decreased in both the third quarter and the first nine months of 2020 compared to 2019 primarily due to the decrease of 30.5% (-33.4% in constant currency) in the permanent recruitment business, partially offset by the increase in the staffing/interim gross profit margin due to a direct cost accrual adjustment in France related to a payroll tax audit recorded in the third quarter of 2020.

Gross profit margin decreased in the first nine months of 2020 compared to 2019 primarily due to the decrease of 30.9% (-30.8% in constant currency) in the permanent recruitment business and a decrease in the staffing/interim gross profit margin in France, Italy and certain countries within Other Southern Europe, partially offset by a direct cost accrual adjustment in France recorded in the first nine months of 2020.

Selling and administrative expenses increased 2.0% (decrease -2.9% in constant currency) during the third quarter of 2020 compared to 2019 primarily due to an increase in restructuring costs to $7.6 million in the third quarter of 2020 compared to zero in the third quarter of 2019, the loss of $5.8 million from the disposition of our Serbia, Slovenia, Bulgaria, and Croatia businesses, and the unfavorable impact of changes in currency exchange rates.

These increases were partially offset by the reduction of our discretionary expenses, a decrease in personnel costs, as a result of a reduction in headcount, and a decrease in variable incentive costs due to a decline in profitability in most markets.

Selling and administrative expenses decreased 5.7% (-6.2% in constant currency) in the nine months ended September 30, 2020 compared to 2019.

We took significant actions in France and Italy in March and April to reduce our costs to help offset the materially reduced revenues in the first nine months of 2020.

In both France and Italy, we transitioned full-time equivalent employees onto

government temporary unemployment programs and other initiatives and eliminated a significant amount of discretionary spend to manage through the COVID-19 crisis.

The decrease in selling and administrative expenses in the first nine months of 2020 was primarily due to the decreases in personnel costs, as a result of a reduction in headcount, a decrease in variable incentive costs due to a decline in profitability in most markets , and the benefits related to the transition of full-time equivalent employees onto government temporary unemployment programs in certain markets that mostly occurred in the second quarter of 2020 .

The decreases are also due to the reduction of our discretionary expenses.

These decreases were offset by the increase in restructuring costs to $ 20.7 million in the first nine months of 2020 compared to $ 5.4 million in the first nine months of 2019 , the loss on the disposition of subsidiaries and the additional recurring selling and administrative costs from our acquisition of the remaining interest in Manpower Switzerland.

OUP margin in Southern Europe was 3.4% for the third quarter of 2020 compared to 4.9% for 2019.

In France, the OUP margin decreased to 4.3% for the third quarter of 2020 from 5.1% in 2019 primarily due to expense deleveraging partially offset by the increase in the gross profit margin.

In Italy, the OUP margin decreased to 4.4% for the third quarter of 2020 from 6.2% for 2019 primarily due to the decline in the gross profit margin, the increase in restructuring costs to $1.8 million in the third quarter of 2020 compared to zero in the third quarter of 2019 and expense deleveraging.

Other Southern Europe’s OUP margin decreased to 0.9% for the third quarter of 2020 from 3.9% in 2019, due to the increase in restructuring costs to $5.8 million in the third quarter of 2020 compared to zero in the third quarter of 2019, the loss from the disposition of subsidiaries in the third quarter of 2020, decrease in the gross profit margin and expense deleveraging.

OUP margin in Southern Europe was 2.5% for the nine months ended September 30, 2020 compared to 4.8% in 2019.

In France, the OUP margin decreased to 2.9% in the nine months ended September 30, 2020 compared to 4.9% in 2019.

In Italy, the OUP margin decreased to 4.3% in the nine months ended September 30, 2020 compared to 6.5% in 2019.

The decreases in France and Italy were primarily due to the decline in the gross profit margin and expense deleveraging.

Other Southern Europe’s OUP margin decreased to 0.6% in the nine months ended September 30, 2020 compared to 3.2% in 2019, due to the decrease in the gross profit margin, the increase in restructuring costs to $17.3 million in the first nine months of 2020 from $3.1 million in the first nine months of 2019, the loss from the disposition of subsidiaries in the first nine months of 2020 and expense deleveraging.

In Southern Europe, which includes operations in France and Italy, revenues from services increased 11.1% (2.0% in constant currency) in the first quarter of 2021 compared to the first quarter of 2020.

In the first quarter of 2021, revenues from services increased 8.7% (decrease of -0.5% in constant currency) in France (which represents 55% of Southern Europe’s revenues) and increased 22.9% (12.5% in constant currency) in Italy (which represents 19% of Southern Europe’s revenues).

The increase in France is primarily due to the favorable impact of changes in currency exchange rates, partially offset by the unfavorable impact of one fewer billing day.

The increase in Italy was primarily due to the increased demand for our Manpower staffing services and an 18.1% increase (8.1% in constant currency) in the permanent recruitment business, partially offset by the unfavorable impact of approximately one fewer billing day.

In Other Southern Europe, revenues from services increased 8.7% (0.8% in constant currency) during the first quarter of 2021 compared to the first quarter of 2020, due to increased demand for our Manpower staffing services,

partially offset by the decrease in our permanent recruitment business of 17.4% (-22.5% in constant currency) due to the continued impact of the COVID-19 crisis and the disposition of subsidiaries in Other Southern Europe in the third quarter of 2020 .

Gross profit margin decreased in the first quarter of 2021 compared to the first quarter of 2020 primarily due to the decrease of 1.9% (-9.5% in constant currency) in the permanent recruitment business and the decrease in the staffing/interim gross profit margin as lower margin enterprise clients represented a larger percentage of revenues during the first quarter of 2021.

Selling and administrative expenses increased 2.3% (decrease of -6.0% in constant currency) during the first quarter of 2021 compared to the first quarter of 2020 primarily due to the unfavorable impact of changes in currency exchange rates and an increase in variable incentive costs due to an increase in profitability in certain markets.

These increases were partially offset by the decrease in restructuring costs to zero in the first quarter of 2021 from $13.1 million in the first quarter of 2020 and the reduction in discretionary expenses.

OUP margin in Southern Europe was 3.4% for the first quarter of 2021 compared to 2.7% for the first quarter of 2020.

In France, the OUP margin increased to 3.6% for the first quarter of 2021 from 3.5% in the first quarter of 2020 primarily due to our ability to increase revenues without a similar increase in expenses, partially offset by the decrease in the overall gross profit margin.

In Italy, the OUP margin increased to 4.8% for the first quarter of 2021 from 4.3% for the first quarter of 2020 primarily due to the decrease in restructuring costs to zero in the first quarter of 2021 from $1.6 million in the first quarter of 2020.

Other Southern Europe’s OUP margin increased to 2.0% in the first quarter of 2021 from 0.2% in the first quarter of 2020, primarily due to the decrease in restructuring costs to zero in the first quarter of 2021 from $11.5 million in the first quarter of 2020, partially offset by the decrease in the gross profit margin.

Northern Europe

In Northern Europe, which includes operations in the United Kingdom, Germany, the Nordics, the Netherlands and Belgium (comprising 34%, 16%, 21%, 12%, and 8%, respectively, of Northern Europe’s revenues), revenues from services decreased 18.8% (-21.6% in constant currency) in the third quarter of 2020 compared to 2019.

We experienced revenue declines in the United Kingdom, Germany, the Nordics, the Netherlands and Belgium of 18.3%, 28.0%, 13.2%, 18.6% and 25.3% (-22.0%, -31.5%, -15.1%, -22.6% and -29.1%, respectively, in constant currency).

The Northern Europe revenue decrease is primarily due to reduced demand for our Manpower staffing services and a 32.9% decrease (-35.9% in constant currency) in the permanent recruitment business, both primarily due to the impact of the COVID-19 crisis.

Revenues from services decreased 19.1% (-17.9% in constant currency) in the nine months ended September 30, 2020 compared to 2019.

We experienced revenue declines in the United Kingdom, Germany, the Nordics, the Netherlands and Belgium of 14.9%, 26.1%, 19.1%, 21.9% and 27.7% (-14.7%, -26.0%, -15.3%, -21.9% and -27.8%, respectively, in constant currency).

The Northern Europe revenue decrease is primarily due to reduced demand for our Manpower staffing services and a 32.1% decrease (-31.3% in constant currency) in the permanent recruitment business, both primarily due to the impact of the COVID-19 crisis.

Gross profit margin decreased in both the third quarter and first nine months of 2020 compared to 2019 due to the decreases in our permanent recruitment business for the third quarter and nine months ended September 30, 2020 compared to 2019, and the declines in the Experis interim margins due to client mix changes, as a higher percentage of revenues consisted of revenues from our lower-margin enterprise clients, and the margin decrease in our Proservia business primarily related to the lower utilization of consultants in Germany.

Selling and administrative expenses increased 1.2% (decrease of -3.2% in constant currency) in the third quarter of 2020 compared to 2019 primarily due to the increase in restructuring costs to $24.1 million in the third quarter of 2020 from zero in the third quarter of 2019 and the unfavorable impact of changes in currency exchange rates.

These increases were partially offset by the decrease in discretionary expenses and personnel costs, as a result of a reduction in headcount, a decrease in variable incentive costs due to declines in profitability in most markets, and the continued benefits related to the transition of full-time equivalent employees onto government temporary unemployment programs in Germany and the Netherlands.

Selling and administrative expenses decreased 9.7% (-8.9% in constant currency) in the nine months ended September 30, 2020 compared to 2019 primarily due to the decrease in personnel costs, as a result of a reduction in headcount, a decrease in variable incentive costs due to decline s in profitability in most markets , and the benefits related to the transition of full-time equivalent employees onto government temporary unemployment programs in certain markets, mostly in the second quarter of 2020.

The decrease is also due to the decline in office-related expenses driven by a decrease in the number of offices, and a reduction of our discretionary expenses.

These decreases were partially offset by increase of restructuring costs to $43.5 million in the first nine months of 2020 from $18.7 million in the first nine months of 2019 and the increase in the goodwill impairment charge in Germany of $66.8 million in the first nine months of 2020 compared to $60.2 million in the first nine months of 2019.

Northern Europe experienced a decrease to an operating unit loss of 2.4% in the third quarter of 2020 from an OUP margin of 2.0% in the third quarter of 2019 and a decrease to an operating unit loss of 1.3% in the nine months ended September 30, 2020 from an OUP margin of 1.4% in the nine months ended September 30, 2019.

The decreases were primarily due to the declines in the gross profit margins, the increase in restructuring costs, and expense deleveraging.

The decrease in the nine months ended September 30, 2020 was also due increase in the goodwill impairment charge in Germany.

Revenues from services decreased 5.4% (-6.0% in constant currency) in the third quarter of 2020 compared to 2019.

In Japan (which represents 45% of APME’s revenues), revenues from services increased 5.7% (4.5% in constant currency) due to the increased demand for our staffing/interim services, partially offset by a 13.0% decrease (-14.0% in constant currency) in our permanent recruitment business and the unfavorable impact of approximately one fewer billing day.

In Australia (which represents 17% of APME’s revenues), revenues from services decreased 4.5% (-8.4% in constant currency) due to the decline in demand for our staffing/interim services and the 5.0% (-8.8% in constant currency) decrease in our permanent recruitment business, both due to the impact of the COVID-19 crisis, as well as the unfavorable impact of approximately one fewer billing day.

The revenue decrease in the remaining markets in APME is due to the decline in demand for our staffing/interim services and the decrease in our permanent recruitment business, both due to the COVID-19 crisis, partially offset by the increase in demand for our Talent-Based Outsourcing services within our Manpower business.

Revenues from services decreased 14.2% (-13.3% in constant currency and -2.8% in organic constant currency) in the nine months ended September 30, 2020 compared to 2019.

In Japan, revenues from services increased 8.8% (7.2% in constant currency) due to increased demand for our staffing/interim services, an increase in our Talent Solutions business and the favorable impact of approximately one additional billing days in the first nine months of 2020 compared to 2019.

These increases were partially offset by a 5.1% decrease (-6.5% in constant currency) in our permanent recruitment business.

In Australia, revenues from services decreased 20.3% (-17.6% in constant currency) due to the decrease in our staffing/interim revenues, as a result of our decision to exit certain businesses with low-margins to improve profitability and the impact of the COVID-19 crisis, the 8.7% (-5.6% in constant currency) decline in our permanent recruitment business and the unfavorable impact of approximately one fewer billing day.

The revenue decrease in the remaining markets in APME is due to the Deconsolidation, and the decline in demand for our staffing/interim services and the decrease in our permanent recruitment business, both due to the COVID-19 crisis, partially offset by the increase in demand for our Talent-Based Outsourcing services within our Manpower business.

Gross profit margin increased in the third quarter of 2020 compared to 2019 due to the increase in our staffing/interim margin, mostly in Japan, partially offset by the decrease in our permanent recruitment business of 15.8% (-18.2% in constant currency).

Gross profit margin decreased in the first nine months of 2020 compared to 2019 due to the decrease in our permanent recruitment business of 30.3% (-28.8% in constant currency and -11.6% in organic constant currency), partially offset by the increase in our staffing/interim margin, mostly in Japan.

Selling and administrative expenses increased 82.3% (79.4% in constant currency) in the third quarter of 2020 compared to 2019 primarily due to the gain of $30.4 million from the Deconsolidation in the third quarter of 2019, an increase in costs to support the increase in revenues in certain markets, and the increase of restructuring costs to $1.5 in the third quarter of 2020 from zero in the third quarter of 2019.

Selling and administrative expenses increased 2.5% (3.5% in constant currency and 22.9% in organic constant currency) in the first nine months of 2020 compared to 2019 primarily due to the gain from the Deconsolidation in the first nine months of 2019 and an increase in costs to support the increase in revenues in certain markets.

These increases were partially offset by the reduction of

recurring selling and administrative costs as a result of the Deconsolidation and the decrease of restructuring costs to $4.1 million in the first nine months of 2020 compared to $4.4 million in the first nine months of 2019.

OUP margin for APME decreased to 2.8% in the third quarter of 2020 from 8.7% in the third quarter of 2019 due to the gain from the Deconsolidation in the third quarter of 2019, an increase in restructuring costs and expense deleveraging, partially offset by an increase in the gross profit margin.

OUP margin decreased to 2.9% in the first nine months of 2020 from 5.1% in the first nine months of 2019 due to the gain from the Deconsolidation in the third quarter of 2019, a decline in the gross profit margin and expense deleveraging.

In Northern Europe, which includes operations in the United Kingdom, the Nordics, Germany, the Netherlands and Belgium (comprising 38%, 20%, 14%, 11%, and 7%, respectively, of Northern Europe’s revenues), revenues from services increased 6.1% (decrease of -2.3% in constant currency) in the first quarter of 2021 compared to the first quarter of 2020.

We experienced revenue increases in the United Kingdom, the Nordics and the Netherlands of 12.4%, 8.4% and 3.7%, respectively (increase of 4.0%, decrease of -3.9% and decrease of -5.1%, respectively, in constant currency) and revenue decreases in Germany and Belgium of 9.8% and 6.9%, respectively (-17.4% and -14.8%, respectively, in constant currency).

The revenue increase in Northern Europe was due to the favorable impact of changes in currency exchange rates and the increase in demand for our Manpower staffing services, primarily in the United Kingdom, partially offset by a decrease in demand for our Experis interim services and a 5.4% decrease (-13.1% in constant currency) in the permanent recruitment business and the unfavorable impact of approximately one fewer billing day.

Gross profit margin decreased in the first quarter of 2021 compared to the first quarter of 2020 due to the decrease in our permanent recruitment business in the first quarter of 2021 compared to the first quarter of 2020, and the decline in the Manpower staffing margin due to client mix changes, as a higher percentage of revenues consisted of revenues from our lower-margin enterprise clients.

Selling and administrative expenses decreased 7.8% (-15.6% in constant currency) in the first quarter of 2021 compared to the first quarter of 2020 primarily due to the decrease in restructuring costs to zero in the first quarter of 2021 from $19.5 million in the first quarter of 2020, the unfavorable impact of changes in currency exchange rates and the decrease in non-personnel and discretionary costs.

These decreases were partially offset by the increase in variable incentive costs due to an increase in profitability in certain markets.

OUP margin for Northern Europe increased to 0.4% in the first quarter of 2021 from an operating unit loss of 1.3% in the first quarter of 2020.

The increase was primarily due to the decrease in restructuring costs, partially offset by the decrease in the gross profit margin.

Revenues from services increased 5.5% (0.3% in constant currency) in the first quarter of 2021 compared to the first quarter of 2020.

In Japan (which represents 45% of APME’s revenues), revenues from services increased 11.8% (8.9 % in constant currency) due to the increased demand for our staffing/interim services and the favorable impact of approximately one additional billing day, partially offset by a 3.5% decrease (-5.9% in constant currency) in our permanent recruitment business.

In Australia (which represents 17% of

APME’s revenues), revenues from services increased 12.3% ( decrease of -4.8% in constant currency) due to the favorable impact of changes in currency exchange rates, partially offset by the unfavorable impact of approximately three fewer billing days.

The revenue decrease in the remaining markets in APME is due to the decline in demand for our staffing/interim services due to the COVID-19 crisis, partially offset by the increase in demand for our Talent-Based Outsourcing services within our Manpower business and the favorable impact of changes in currency exchange rates .

Gross profit margin increased in the first quarter of 2021 compared to the first quarter of 2020 primarily due to the increase in our staffing/interim margin, mostly in Japan.

Selling and administrative expenses increased 7.9% (0.9% in constant currency) in the first quarter of 2021 compared to the first quarter of 2020 primarily due to the unfavorable impact of changes in currency exchange rates and the increase in variable incentive costs due to an increase in profitability in certain markets.

These were partially offset by the decrease of restructuring costs to zero in the first quarter of 2021 from $2.6 million in the first quarter of 2020.

OUP margin for APME increased to 3.0% in the first quarter of 2021 from 2.9% in the first quarter of 2020 due to the increase in the gross profit margin and the decrease in restructuring costs, partially offset by the increase in variable incentive costs.

Financial Measures

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Constant currency and organic constant currency percent variances, along with a reconciliation of these amounts to certain of our reported results, are provided below:

3 Months Ended September 30, 2020 Compared to 2019

and Dispositions

Revenues from services:

United States

Other Americas

Southern Europe:

Other Southern Europe

Northern Europe

Selling and Administrative Expenses

Operating Profit

In millions for the three months ended September 30, 2020.

9 Months Ended September 30, 2020 Compared to 2019

3 Months Ended March 31, 2021 Compared to 2020

and Dispositions

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Operating Profit

In millions for the nine months ended September 30, 2020.

In millions for the three months ended March 31, 2021.

Liquidity and Capital Resources

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We use a global cash pooling arrangement, intercompany lending, and some local credit lines to meet funding needs and allocate our capital resources among our various entities.

As of September 30, 2020, we had $1,300 million of cash held by foreign subsidiaries.

As of March 31, 2021, we had $1,365.6 million of cash held by foreign subsidiaries.

We have historically made and anticipate future cash repatriations to the United States from certain foreign subsidiaries to fund domestic operations.

With the enactment of the United States Tax Cuts and Jobs Act in

December 2017, we no longer record United States federal income taxes on unremitted earnings of non-United States subsidiaries.

With the enactment of the United States Tax Cuts and Jobs Act in December 2017, we no longer record United States federal income taxes on unremitted earnings of non-United States subsidiaries.

However, we do record deferred tax liabilities related to non-United States withholding and other taxes on unremitted earnings that are not considered permanently invested.

Cash provided by operating activities was $715.7 million and $495.4 million during the nine months ended September 30, 2020 and 2019, respectively.

Changes in operating assets and liabilities generated $599.7 million of cash during the nine months ended September 30, 2020 compared to $114.7 million of cash generated during the nine months ended September 30, 2019.

These changes were primarily attributable to a decrease in accounts receivable, due to collections and the receivables not being replaced at the same level as a result of a decrease in demand for our services, and the benefit of certain government payment deferral measures introduced as part of the COVID-19 crisis.

These improvements in our cash flows were partially offset by the decrease in our payroll-related liabilities due to lower activity.

Accounts receivable decreased to $4,535.7 million as of September 30, 2020 from $5,273.1 million as of December 31, 2019.

This decrease is primarily due to successful collection efforts and the revenue decline, partially offset by the impact of changes in currency exchange rates.

Days Sales Outstanding ("DSO") decreased by approximately 1.0 day from December 31, 2019 due to successful collection efforts and favorable mix changes, as a higher percentage of our consolidated revenues were generated in countries with a lower average DSO.

The nature of our operations is such that our most significant current asset is accounts receivable, with an average days sales outstanding of between 55 and 60 days based on the markets where we do business.

Our most significant current liabilities are payroll related costs, which are generally paid either weekly or monthly.

As the demand for our services increases, we generally see an increase in our working capital needs, as we continue to pay our associates on a weekly or monthly basis while the related accounts receivable is outstanding for much longer, which may result in a decline in operating cash flows.

Conversely, as the demand for our services declines, as we saw starting in late March and continuing through the third quarter of 2020 due to the impact of the COVID-19 crisis, we generally see a decrease in our working capital needs, as the existing accounts receivable are collected and not replaced at the same level, resulting in a decline of our accounts receivable balance, with less of an effect on current liabilities due to the shorter cycle time of the payroll related items.

Cash provided by operating activities was $140.9 million and $181.0 million during the three months ended March 31, 2021 and 2020, respectively.

Changes in operating assets and liabilities generated $58.9 million of cash during the three months ended March 31, 2021 compared to $147.7 million of cash generated during the three months ended March 31, 2020.

These changes were primarily attributable to an increase in accounts receivable due to the stronger market environment as the impact of the COVID-19 crisis has stabilized in many parts of the world.

Accounts receivable decreased to $4,892.1 million as of March 31, 2021 from $4,912.4 million as of December 31, 2020.

This decrease is due to the impact of changes in currency exchange rates.

Days Sales Outstanding ("DSO") increased to approximately 56 as of March 31, 2021 from approximately 54 as of December 31, 2020 due to unfavorable mix changes, with higher growth in countries with a higher average DSO.

The nature of our operations is such that our most significant current asset is accounts receivable and our most significant current liabilities are payroll related costs, which are generally paid either weekly or monthly.

As the demand for our services increases, as we saw during the first quarter of 2021, we generally see an increase in our working capital needs, as we continue to pay our associates on a weekly or monthly basis while the related accounts receivable is outstanding for much longer, which may result in a decline in operating cash flows.

Conversely, as the demand for our services declines, we generally see a decrease in our working capital needs, as the existing accounts receivable are collected and not replaced at the same level, resulting in a decline of our accounts receivable balance, with less of an effect on current liabilities due to the shorter cycle time of the payroll related items.

This may result in an increase in our operating cash flows;

however, any such increase would not be expected to be sustained in the event that an economic downturn continued for an extended period.

During the third quarter of 2020, we were highly successful in receivable collections while incurring lower payroll costs on lower activity.

Our improved cash flow also benefited from certain government payment deferral measures introduced as part of the COVID-19 crisis, with some of the benefits maturing in the third quarter.

The impact of the remaining benefits is expected to mature in the last quarter of the 2020 and first quarter of 2021 and we expect lower levels of operating cash flow during the fourth quarter of 2020 and first quarter of 2021.

Capital expenditures were $30.5 million for the nine months ended September 30, 2020 compared to $36.2 million for the nine months ended September 30, 2019.

Capital expenditures were $12.7 million for the three months ended March 31, 2021 compared to $9.1 million for the three months ended March 31, 2020.

These expenditures were primarily comprised of purchases of computer equipment, office furniture and other costs related to office openings and refurbishments, as well as capitalized software costs.

The lower expenditures in 2020 compared to 2019 are primarily due to overall scale-back of activities in 2020 due to the COVID-19 crisis and the completion of a software development project in 2019, as well as the timing of capital expenditures.

The higher expenditures in 2021 compared to 2020 are primarily due to additional technology investments and the timing of capital expenditures.

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 million, 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 $5.8 million, 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 million, 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.

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

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

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

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

The total cash impact of the acquisition was an inflow of $104.8 million , net of cash acquired of $317.5 million .

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 million , which is included within interest and other expenses (income), net on the Consolidated Statements of Operations.

Of the $80.4 million , $32.5 million 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 million for the nine months ended September 30, 2019.

This balance represents contingent consideration payments related to previous acquisitions, of which $12.9 million had been recognized as a liability at the acquisition date.

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 the 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.

Net debt repayments were $28.7 million in the nine months ended September 30, 2020 compared to cash provided by net borrowings of $6.3 million in the nine months ended September 30, 2019.

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

Net debt borrowings were $2.8 million in the three months ended March 31, 2021 compared to net debt payments of $9.4 million in the three months ended March 31, 2020.

Our €500.0 million notes and €400.0 million notes are due June 2026 and September 2022, respectively.

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We currently do not anticipate any problems accessing the credit markets should we decide to replace either the €500.0 million or €400.0 million notes.

As of September 30, 2020, we had letters of credit totaling $0.5 million issued under our $600.0 million revolving credit facility.

Additional borrowings of $599.5 million were available to us under the facility as of September 30, 2020.

As of March 31, 2021, we had letters of credit totaling $0.5 million issued under our $600.0 million revolving credit facility.

Additional borrowings of $599.5 million were available to us under the facility as of March 31, 2021.

The $600.0 million revolving credit agreement requires that we comply with a leverage ratio (Net Debt-to-Net Earnings before interest and other expenses, provision for income taxes, intangible asset amortization expense, depreciation and amortization expense ("EBITDA")) of not greater than 3.5 to 1 and a fixed charge coverage ratio of not less than 1.5 to 1.

As defined in the agreement, we had a Net Debt-to-EBITDA ratio of (0.24) to 1 and a fixed charge coverage ratio of 3.33 to 1 as of September 30, 2020.

As defined in the agreement, we had a Net Debt-to-EBITDA ratio of -0.09 to 1 and a fixed charge coverage ratio of 3.39 to 1 as of March 31, 2021.

Based on our current forecast, we expect to be in compliance with our financial covenants for the next 12 months.

We have assessed what impact the COVID-19 crisis has had or may have on our liquidity position as of September 30, 2020 and for the near future.

As of September 30, 2020, our cash and cash equivalents balance was $1,587.7 million.

We also have access to the previously mentioned revolving credit facility that could immediately provide us with up to $600 million of additional cash, which remains unused as of September 30, 2020, and we have an option to request an increase to the total availability under the revolving credit facility by an additional $200 million and each lender may participate in the requested increase at their discretion.

In addition, we have access to the previously mentioned credit lines of up to $300 million ($600 million in the third quarter) to meet the working capital needs of our subsidiaries, of which $262.0 million was available to use as of September 30, 2020.

Our €500.0 million notes and €400.0 million notes that total $1,049.6 million as of September 30, 2020 mature in 2022 and 2026, thus, there are no payments due in the very near term except for annual interest payments.

Based on the above, we believe we have sufficient liquidity and capital

resources to satisfy future requirements and meet our obligations currently and in the near future should the COVID-19 crisis cause any additional cash flow needs.

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.

We have assessed what impact the COVID-19 crisis has had or may have on our liquidity position as of March 31, 2021 and for the near future.

As of March 31, 2021, our cash and cash equivalents balance was $1,522.7 million.

We also have access to the previously mentioned revolving credit facility that could immediately provide us with up to $600 million of additional cash, which remains unused as of March 31, 2021, and we have an option to request an increase to the total availability under the revolving credit facility by an additional $200 million and each lender may participate in the requested increase at their discretion.

In addition, we have access to the previously mentioned credit lines of up to $300 million ($600 million in the third quarter) to meet the working capital needs of our subsidiaries, of which $268.5 million was available to use as of March 31, 2021.

Our €500.0 million notes and €400.0 million notes that total $1,051.1 million as of March 31, 2021 mature in 2026 and 2022, thus, there are no payments due in the very near term except for annual interest payments.

Based on the above, we believe we have sufficient liquidity and capital resources to satisfy future requirements and meet our obligations currently and in the near future should the COVID-19 crisis cause any additional cash flow needs.

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.

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

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 million.

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 million 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.

We had aggregate commitments of $2,139.3 million as of September 30, 2020 related to debt, operating leases, severances and office closure costs, transition tax resulting from the Tax Act and certain other commitments compared to $2,202.8 million as of December 31, 2019.

We also have entered into guarantee contracts and stand-by letters of credit totaling approximately $941.7 million and $845.0 million as of September 30, 2020 and December 31, 2019, respectively ($890.1 million and $793.4 million for guarantees, respectively, and $51.6 million for stand-by letters of credit as of both dates).

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

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 cost of $63.8 million.

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.

We had aggregate commitments of $ 2 , 169 .

9 m illion as of March 31, 2021 related to debt, operating leases, severances and office closure costs, transition tax resulting from the Tax Act and certain other commitments compared to $ 2 , 197 .

6 million as of December 31, 2020 .

We also have entered into guarantee contracts and stand-by letters of credit totaling $897.0 million and $890.0 million as of March 31, 2021 and December 31, 2020, respectively ($845.4 million and $838.4 million for guarantees, respectively, and $51.6 million for stand-by letters of credit as of both dates).

The guarantees primarily relate to staffing license requirements, operating leases and indebtedness.

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Therefore, they have been excluded from our aggregate commitments.

The cost of these guarantees and letters of credit was $1.4 million and $1.3 million for the nine months ended September 30, 2020 and 2019, respectively.

We recorded net restructuring costs of $98.1 million and $42.5 million 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 $22.4 million 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 million during the nine months ended September 30, 2020.

The cost of these guarantees and letters of credit was $0.5 million for both the three months ended March 31, 2021 and 2020.

We did not record any net restructuring costs during the three months ended March 31, 2021.

We recorded net restructuring costs of $48.2 million 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.

The costs paid or utilized out of our restructuring reserve were $13.8 million during the first quarter of 2021.

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

Application of Critical Accounting Policies

In accordance with the accounting guidance for goodwill, we perform an annual impairment test of goodwill at our reporting unit level during the third quarter, or more frequently if events or circumstances change that would more likely than not reduce the fair value of our reporting units below carrying value.

Estimated cash flows and goodwill are grouped at the reporting unit level, which the company has determined to be a component of the operating segments for which discrete financial information is available and for which segment management regularly reviews the reporting results.

We evaluate the recoverability of goodwill utilizing an income approach that estimates the fair value of the future discounted cash flows to which the goodwill relates.

This approach reflects management’s internal outlook of the reporting units, which is believed to be the best determination of value due to management’s insight and experience with the reporting units.

Significant assumptions used in our goodwill impairment test during the third quarter of 2020 included:

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

The expected future revenue growth rates and operating unit profit margins were determined after taking into consideration our historical revenue growth rates and operating unit profit margins, our assessment of future market potential, and our expectations of future business performance.

We believe that the future discounted cash flow valuation model provides the most reasonable and meaningful fair value estimate based on the reporting units’ projections of future operating results and cash flows and is consistent with our view of how market participants would value the company’s reporting units in an orderly transaction.

In the event the fair value of a reporting unit is less than the carrying value, including goodwill, we would record an impairment charge based on the excess of a reporting units’ carrying amount over its fair value.

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 during the third quarter of 2020 and there was no impairment of our goodwill as a result of our annual tests.

Refer to Note 1 for results of our annual goodwill impairment testing.

Recently Issued Accounting Standards

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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 2. Management’s Discussion and Analysis