UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2020



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35636

ASGN ~~Incorporated~~Incorporated

(Exact name of registrant as specified in its charter)

Delaware

95-4023433

(State of Incorporation)

(I.R.S. Employer Identification No.)

4400 Cox Road, Suite 110

Glen Allen, Virginia23060

(Address, including zip code, of Principal Executive Offices)

(~~888~~) (888) 482-8068

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock

ASGN

NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ~~“large~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting ~~company”~~company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

At ~~August 3,~~November 2, 2020, the total number of outstanding shares of the Common Stock of ASGN Incorporated (the "Company") ($0.01 par value) was ~~52.5~~52.9 million.

ASGN INCORPORATED AND SUBSIDIARIES

INDEX


~~ASGN INCORPORATED AND SUBSIDIARIES~~PART I — FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (U naudited)		~~INDEX~~ 3

~~PART I – FINANCIAL INFORMATION~~

~~Item 1 – Condensed Consolidated Financial Statements (unaudited)~~	3

Condensed Consolidated Balance Sheets	3

Condensed Consolidated Statements of Operations and Comprehensive Income		4

Condensed Consolidated Statements of Stockholders’ Equity		5

Condensed Consolidated Statements of Cash Flows		6

Notes to Condensed Consolidated Financial Statements		7

Item 2 – —Management’s Discussion and Analysis of Financial Condition and Results of Operations		1312

Item 3 –— Quantitative and Qualitative Disclosures about Market Risks		1520

Item 4 – —Controls and Procedures		1620

PART II –— OTHER INFORMATION

Item 1 –— Legal Proceedings		1621

Item 1A – —Risk Factors		1621

Item 2 – —Unregistered Sales of Securities and Use of Proceeds		1621

Item 3 – —Defaults Upon Senior Securities		1621

Item 4 – —Mine Safety Disclosures		1621

Item 5 – —Other Information		1621

Item 6 – —Exhibits		1722

Signature		1823

PART I -— FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (Unaudited)

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except ~~par value~~ per ~~share)~~share data)

June 30,
2020 December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents $ 207.9
$ 95.2
Accounts receivable, net 612.1
648.7
Prepaid expenses and income taxes 15.9
29.4
Other current assets 18.7
18.2
Total current assets 854.6
791.5
Property and equipment, net 79.2
73.7
Operating lease right of use assets 90.3
94.6
Identifiable intangible assets, net 474.6
476.5
Goodwill 1,547.3
1,486.9
Other 19.5
18.2
Total assets $ 3,065.5
$ 2,941.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 37.5
$ 39.2
Accrued payroll and contract professional pay 206.5
203.2
Operating lease liabilities 27.6
25.8
Other current liabilities 85.7
72.7
Total current liabilities 357.3
340.9
Long-term debt 1,032.9
1,032.3
Operating lease liabilities 69.5
75.7
Deferred income tax liabilities 98.6
98.7
Payroll tax deferral and other 50.1
17.6
Total liabilities 1,608.4
1,565.2
Commitments and contingencies (Note 6)

Stockholders’ equity:
Preferred stock, $0.01 par value; 1 million shares authorized; no shares issued —
—
Common stock, $0.01 par value; 75 million shares authorized; 52.5 million and 52.9 million shares outstanding as of June 30, 2020 and December 31, 2019, respectively 0.5
0.5
Paid-in capital 645.9
638.0
Retained earnings 818.6
744.7
Accumulated other comprehensive loss (7.9 ) (7.0 )
Total stockholders’ equity 1,457.1
1,376.2
Total liabilities and stockholders’ equity $ 3,065.5
$ 2,941.4


	September 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	229.7	$	95.2
Accounts receivable, net	676.5		648.7
Prepaid expenses and income taxes	10.3		29.4
Other current assets	18.2		18.2
Total current assets	934.7		791.5
Property and equipment, net	74.2		73.7
Operating lease right of use assets	93.2		94.6
Identifiable intangible assets, net	496.8		476.5
Goodwill	1,590.9		1,486.9
Other	21.8		18.2
Total assets	$	3,211.6	2,941.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	50.1	$	39.2
Accrued payroll and contract professional pay	236.5		203.2
Operating lease liabilities	31.0		25.8
Other current liabilities	71.8		72.7
Total current liabilities	389.4		340.9
Long-term debt	1,033.2		1,032.3
Operating lease liabilities	70.2		75.7
Deferred income tax liabilities	107.2		98.7
Payroll tax deferral and other	87.4		17.6
Total liabilities	1,687.4		1,565.2
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.01 par value; 1.0 million shares authorized; 0 shares issued	0		0
Common stock, $0.01 par value; 75.0 million shares authorized; 52.8 million and 52.9 million shares outstanding as of September 30, 2020 and December 31, 2019, respectively	0.5		0.5
Paid-in capital	657.7		638.0
Retained earnings	870.9		744.7
Accumulated other comprehensive loss	(4.9)		(7.0)
Total stockholders’ equity	1,524.2		1,376.2
Total liabilities and stockholders’ equity	$	3,211.6	$	2,941.4

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(In millions, except per share amounts)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues	$	1,011.9	$	1,002.7	$	2,939.2	$	2,898.7
Costs of services	740.9		711.3		2,126.5		2,058.2
Gross profit	271.0		291.4		812.7		840.5
Selling, general and administrative expenses	177.2		188.6		547.3		574.8
Amortization of intangible assets	12.9		11.9		37.6		38.8
Operating income	80.9		90.9		227.8		226.9
Interest expense	(9.3)		(12.7)		(30.4)		(41.2)
Income before income taxes	71.6		78.2		197.4		185.7
Provision for income taxes	19.3		20.7		52.5		50.2
Income from continuing operations	52.3		57.5		144.9		135.5
Loss from discontinued operations, net of income taxes	0		(0.1)		0		(0.1)
Net income	$	52.3	$	57.4	$	144.9	$	135.4

Earnings per share:
Basic	$	1.00	$	1.09	$	2.75	$	2.57
Diluted	$	0.99	$	1.08	$	2.73	$	2.54

Number of shares and share equivalents used to calculate earnings per share:
Basic	52.5		52.8		52.6		52.7
Diluted	53.0		53.4		53.1		53.4

Reconciliation of net income to comprehensive income:
Net income	$	52.3	$	57.4	$	144.9	$	135.4
Foreign currency translation adjustment	3.0		(2.4)		2.1		(2.5)
Comprehensive income	$	55.3	$	55.0	$	147.0	$	132.9

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Revenues $ 936.8
$ 972.3
$ 1,927.3
$ 1,896.0
Costs of services 676.0
687.1
1,385.6
1,346.9
Gross profit 260.8
285.2
541.7
549.1
Selling, general and administrative expenses 172.2
198.8
370.1
386.2
Amortization of intangible assets 12.6
13.1
24.7
26.9
Operating income 76.0
73.3
146.9
136.0
Interest expense (9.7 ) (14.0 ) (21.1 ) (28.5 )
Income before income taxes 66.3
59.3
125.8
107.5
Provision for income taxes 17.5
16.2
33.2
29.5
Net income $ 48.8
$ 43.1
$ 92.6
$ 78.0

Earnings per share:
Basic $ 0.93
$ 0.82
$ 1.76
$ 1.48
Diluted $ 0.92
$ 0.81
$ 1.74
$ 1.46

Number of shares and share equivalents used to calculate earnings per share:
Basic 52.5
52.8
52.7
52.7
Diluted 53.0
53.4
53.1
53.3

Reconciliation of net income to comprehensive income:
Net income $ 48.8
$ 43.1
$ 92.6
$ 78.0
Foreign currency translation adjustment 1.6
1.0
(0.9 ) (0.1 )
Comprehensive income $ 50.4
$ 44.1
$ 91.7
$ 77.9

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)


	Common Stock			Paid-in Capital		Retained Earnings		Other		Total
	Shares	Par Value
Three Months Ended September 30, 2020
Balance at June 30, 2020	52.5	$	0.5	$	645.9	$	818.6	$	(7.9)	$	1,457.1
Vesting of restricted stock units	—	—		(1.1)		—		—		(1.1)
Employee stock purchase plan	0.3	—		5.2		—		—		5.2
Exercise of stock options	—	—		0.6		—		—		0.6
Stock-based compensation expense	—	—		7.1		—		—		7.1
Foreign currency translation adjustments	—	—		—		—		3.0		3.0
Net income	—	—		—		52.3		—		52.3
Balance at September 30, 2020	52.8	$	0.5	$	657.7	$	870.9	$	(4.9)	$	1,524.2

Three Months Ended September 30, 2019
Balance at June 30, 2019	52.8	$	0.5	$	625.5	$	664.1	$	(6.4)	$	1,283.7
Vesting of restricted stock units	0.1	—		(0.8)		—		—		(0.8)
Employee stock purchase plan	0.1	—		5.7		—		—		5.7
Exercise of stock options	—	—		0.1		—		—		0.1
Stock-based compensation expense	—	—		7.8		—		—		7.8
Stock repurchase and retirement of shares	(0.3)	—		(3.9)		(16.1)		—		(20.0)
Foreign currency translation adjustments	—	—		—		—		(2.4)		(2.4)
Net income	—	—		—		57.4		—		57.4
Balance at September 30, 2019	52.7	$	0.5	$	634.4	$	705.4	$	(8.8)	$	1,331.5

	Common Stock			Paid-in Capital		Retained Earnings		Other		Total
	Shares	Par Value
Nine Months Ended September 30, 2020
Balance at December 31, 2019	52.9	$	0.5	$	638.0	$	744.7	$	(7.0)	$	1,376.2
Vesting of restricted stock units	0.2	—		(7.0)		—		—		(7.0)
Employee stock purchase plan	0.5	—		11.1		—		—		11.1
Exercise of stock options	—	—		0.6		—		—		0.6
Stock-based compensation expense	—	—		24.2		—		—		24.2
Stock repurchases and retirement of shares	(0.8)	—		(9.2)		(18.7)		—		(27.9)
Foreign currency translation adjustments	—	—		—		—		2.1		2.1
Net income	—	—		—		144.9		—		144.9
Balance at September 30, 2020	52.8	$	0.5	$	657.7	$	870.9	$	(4.9)	$	1,524.2

Nine Months Ended September 30, 2019
Balance at December 31, 2018	52.5	$	0.5	$	601.8	$	586.1	$	(6.3)	$	1,182.1
Vesting of restricted stock units	0.3	—		(7.6)		—		—		(7.6)
Employee stock purchase plan	0.2	—		12.6		—		—		12.6
Exercise of stock options	—	—		0.1		—		—		0.1
Stock-based compensation expense	—	—		31.4		—		—		31.4
Stock repurchases and retirement of shares	(0.3)	—		(3.9)		(16.1)		—		(20.0)
Foreign currency translation adjustments	—	—		—		—		(2.5)		(2.5)
Net income	—	—		—		135.4		—		135.4
Balance at September 30, 2019	52.7	$	0.5	$	634.4	$	705.4	$	(8.8)	$	1,331.5

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total
Shares Par Value
Three Months Ended June 30, 2020:
Balance at March 31, 2020 52.4
$ 0.5
$ 638.7
$ 769.8
$ (9.5 ) $ 1,399.5
Vesting of restricted stock units 0.1
—
(1.0 ) —
—
(1.0 )
Stock-based compensation expense —
—
8.2
—
—
8.2
Foreign currency translation adjustments —
—
—
—
1.6
1.6
Net income —
—
—
48.8
—
48.8
Balance at June 30, 2020 52.5
$ 0.5
$ 645.9
$ 818.6
$ (7.9 ) $ 1,457.1

Three Months Ended June 30, 2019:
Balance at March 31, 2019 52.8
$ 0.5
$ 613.2
$ 621.0
$ (7.4 ) $ 1,227.3
Vesting of restricted stock units —
—
(1.3 ) —
—
(1.3 )
Stock-based compensation expense —
—
13.6
—
—
13.6
Foreign currency translation adjustments —
—
—
—
1.0
1.0
Net income —
—
—
43.1
—
43.1
Balance at June 30, 2019 52.8
$ 0.5
$ 625.5
$ 664.1
$ (6.4 ) $ 1,283.7

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total
Shares Par Value
Six Months Ended June 30, 2020:
Balance at December 31, 2019 52.9
$ 0.5
$ 638.0
$ 744.7
$ (7.0 ) $ 1,376.2
Vesting of restricted stock units 0.2
—
(5.9 ) —
—
(5.9 )
Employee stock purchase plan 0.2
—
5.9
—
—
5.9
Stock-based compensation expense —
—
17.1
—
—
17.1
Stock repurchases and retirement of shares (0.8 ) —
(9.2 ) (18.7 ) —
(27.9 )
Foreign currency translation adjustments —
—
—
—
(0.9 ) (0.9 )
Net income —
—
—
92.6
—
92.6
Balance at June 30, 2020 52.5
$ 0.5
$ 645.9
$ 818.6
$ (7.9 ) $ 1,457.1

Six Months Ended June 30, 2019:
Balance at December 31, 2018 52.5
$ 0.5
$ 601.8
$ 586.1
$ (6.3 ) $ 1,182.1
Vesting of restricted stock units 0.2
—
(6.8 ) —
—
(6.8 )
Employee stock purchase plan 0.1
—
6.9
—
—
6.9
Stock-based compensation expense —
—
23.6
—
—
23.6
Foreign currency translation adjustments —
—
—
—
(0.1 ) (0.1 )
Net income —
—
—
78.0
—
78.0
Balance at June 30, 2019 52.8
$ 0.5
$ 625.5
$ 664.1
$ (6.4 ) $ 1,283.7

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)


	Nine Months Ended
	September 30,
	2020		2019
Cash Flows from Operating Activities
Net income	$	144.9	$	135.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	65.6		68.8
Stock-based compensation	23.9		31.1
Other	5.4		12.1
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(18.4)		(30.3)
Prepaid expenses and income taxes	19.2		(1.9)
Accounts payable	13.3		(17.9)
Accrued payroll and contract professional pay	27.9		25.1
Income taxes payable	0.8		15.5
Operating lease right of use assets	21.8		20.9
Operating lease liabilities	(20.8)		(21.3)
Payroll tax deferral and other	54.2		(5.7)
Net cash provided by operating activities	337.8		231.8
Cash Flows from Investing Activities
Cash paid for property and equipment	(28.3)		(22.8)
Cash paid for acquisitions, net of cash acquired	(151.5)		(48.5)
Other	(0.3)		(0.1)
Net cash used in investing activities	(180.1)		(71.4)
Cash Flows from Financing Activities
Proceeds from long-term debt	65.5		59.0
Principal payments of long-term debt	(65.5)		(178.0)
Debt issuance and amendment costs	(1.2)		0
Proceeds from option exercises and employee stock purchase plan	11.7		12.7
Payment of employment taxes related to release of restricted stock awards	(7.0)		(7.7)
Repurchase of common stock	(27.9)		(20.0)
Net cash used in financing activities	(24.4)		(134.0)
Effect of exchange rate changes on cash and cash equivalents	1.2		(0.7)
Net Increase in Cash and Cash Equivalents	134.5		25.7
Cash and Cash Equivalents at Beginning of Year	95.2		41.8
Cash and Cash Equivalents at End of Period	$	229.7	$	67.5

Six Months Ended
June 30,
2020 2019
Cash Flows from Operating Activities:
Net income $ 92.6
$ 78.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 43.0
46.6
Stock-based compensation 16.9
23.3
Other 3.5
8.5
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable 40.5
1.0
Prepaid expenses and income taxes 13.5
(5.3 )
Accounts payable (0.2 ) (21.0 )
Accrued payroll and contract professional pay (0.1 ) 0.5
Income taxes payable 16.7
10.0
Operating lease right of use assets 14.4
13.9
Operating lease liabilities (14.6 ) (13.7 )
Payroll tax deferral and other 24.0
(1.3 )
Net cash provided by operating activities 250.2
140.5
Cash Flows from Investing Activities:
Cash paid for property and equipment (22.6 ) (15.9 )
Cash paid for acquisitions, net of cash acquired (85.5 ) (48.5 )
Other (0.3 ) (0.9 )
Net cash used in investing activities (108.4 ) (65.3 )
Cash Flows from Financing Activities:
Proceeds from long-term debt 65.5
50.0
Principal payments of long-term debt (65.5 ) (127.0 )
Debt issuance and amendment costs (1.3 ) —
Proceeds from option exercises and employee stock purchase plan 5.9
6.9
Payment of employment taxes related to release of restricted stock awards (5.9 ) (6.8 )
Repurchase of common stock (27.9 ) —
Net cash used in financing activities (29.2 ) (76.9 )
Effect of exchange rate changes on cash and cash equivalents 0.1
—
Net Increase (Decrease) in Cash and Cash Equivalents 112.7
(1.7 )
Cash and Cash Equivalents at Beginning of Year 95.2
41.8
Cash and Cash Equivalents at End of Period $ 207.9
$ 40.1


Supplemental Disclosure of Cash Flow Information
Cash paid for —
Income taxes	$	40.7	$	36.6
Interest	$	22.4	$	37.0
Non-cash transactions —
Unpaid portion of additions to property and equipment	$	3.2	$	1.1
Operating lease right of use assets obtained in exchange for operating lease liabilities	$	20.2	$	13.0
Contingent purchase consideration	$	6.0	$	0

Supplemental Disclosure of Cash Flow Information
Cash paid for:
Income taxes $ 5.3
$ 21.0
Interest $ 19.7
$ 25.4
Non-cash transactions:
Unpaid portion of additions to property and equipment $ 4.2
$ 1.1
Operating lease right of use assets obtained in exchange for operating lease liabilities $ 10.4
$ 7.6

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. General

Basis of presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules of the Securities and Exchange Commission ~~(the "SEC"~~("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The December 31, 2019 condensed consolidated balance sheet was derived from audited financial statements. The financial statements include adjustments consisting of normal recurring items, which, in the opinion of management, are necessary for a fair presentation of the financial position of ASGN Incorporated and its subsidiaries ("ASGN" or the "Company") and its results of operations for the interim dates and periods set forth herein. The results for any of the interim periods are not necessarily indicative of the results to be expected for the full year or any other period. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 10-K").

COVID-19 pandemic — As a result of the COVID-19 pandemic, the Company experienced a precipitous decline in revenues from its creative marketing and permanent placement divisions in the second quarter of ~~2020.~~2020, with some recovery in the current quarter. In the ~~aggregate, these divisions accounted for approximately 8.9 percent~~second quarter of ~~consolidated revenues for the quarter. Due to this decline and the uncertainty related to future performance,~~2020, the Company performed an impairment assessment of the goodwill and trademarks of these ~~divisions. This assessment~~divisions, which included sensitivity analyses and stress testing on certain of ~~our~~the more sensitive inputs to ~~our~~the valuation models, including the weighted-average cost of capital and future expected revenues. Based on this assessment wein the second quarter of 2020, the Company concluded that their fair values, more likely than not, exceeded their carrying values. In the third quarter of 2020, revenues from these divisions improved and the other more sensitive inputs to the valuation models remained reasonable. As a result, there were no indicators of impairment at September 30, 2020. Given the uncertainty of the current economic environment, accounting estimates and assumptions that require management's judgments concerning the effects of the economic downturn and recovery, particularly those relating to the recoverability of intangible assets and goodwill, are being closely monitored.

As allowed by the Coronavirus Aid, Relief, and Economic Security Act (“("CARES ~~Act”~~Act"), the Company deferred ~~the~~ payment of ~~certain~~$60.8 million in federal payroll taxes. This relief program is applicable for wages paid through December 31, 2020 and requires 50 percent of the amounts deferred to be paid by December 31, 2021 with the remaining amount paid by December 31, 2022. ~~This deferral, which totaled $31.1 million at June 30, 2020, is included in payroll tax deferral and other noncurrent liabilities in the condensed consolidated balance sheet.~~

2. Accounting Standards Update

On January 1, 2020, the Company adopted Accounting Standard Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires a financial asset to be presented at the net amount expected to be collected. The financial assets of the Company in scope of ASU 2016-13 were primarily accounts receivable. The adoption of this standard did not have a significant impact to the Company's consolidated financial statements. The Company estimates an allowance for expected credit losses on accounts receivable that result from the inability of customers to make required payments. These estimates are based on a combination of historical loss statistics, current business conditions and macro-economic trends. In estimating the allowance for expected credit losses, consideration is given to the current aging of receivables and a specific review for potential bad debts. The resulting bad debt expense is included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive income. Receivables are written-off when deemed uncollectible. The Company evaluates the adequacy of its allowance for credit losses on accounts receivable on a regular basis. The accounts receivable allowance was $5.7 million and $5.1 million at June 30, 2020 and December 31, 2019, respectively, and the activity in the six months ended June 30, 2020 was not material.

On January 1, 2020, the Company adopted ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This update provides guidance regarding the capitalization of implementation costs incurred in a cloud computing arrangement that is a service contract. ASU 2018-15 was adopted prospectively and cloud computing implementation costs incurred on January 1, 2020 or later are included in other noncurrent assets in the consolidated balance sheet and are presented within operating cash flows. As of ~~June~~September 30, 2020, ~~$2.0 million of~~ capitalized implementation costs for cloud computing arrangements were ~~included in other noncurrent assets, and there was an insignificant amount of amortization expense recorded during the six and three months ended June 30, 2020.~~not significant.

~~Effective~~On January 1, 2020, the Company adopted ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 of the goodwill impairment test and goodwill impairment will now be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In March 2020, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases and other contracts. This guidance is optional and may be elected over time as reference rate reform activities occur. The Company is currently evaluating the impact of this guidance.

3. Acquisitions

LeapFrog Systems, Inc. ("LeapFrog")

OnAugust 31, 2020, the Company acquired all of the outstanding shares of LeapFrog, headquartered in Boston, Massachusetts, for $66.0 million in cash and up to $6.0 million in estimated future contingent consideration. The acquisition deepens and expands the Company's capabilities in digital innovation and enterprise solutions for its financial services, insurance and healthcare clients. LeapFrog is part of the Apex Segment. LeapFrog's results of operations are included in the consolidated results of the Company from the date of its acquisition.

The purchase accounting for the LeapFrog acquisition remains incomplete with respect to the provisional fair value of assets acquired and liabilities assumed, as management continues to gather and evaluate information about circumstances that existed as of the acquisition date. Measurement period adjustments will be recognized prospectively within 12 months from the date of acquisition. Goodwill associated with this acquisition totaled $42.4 million, which is not deductible for income tax purposes. Goodwill represents the acquired assembled workforce, potential new customers and future cash flows after the acquisition. Identifiable intangible assets of $35.1 million included customer and contractual relationships and non-compete agreements with useful lives ranging from approximately two to seven years.

~~3. Acquisitions~~

Blackstone Federal ~~Acquisition~~

On January 24, 2020,, the Company acquired certain specified assets and liabilities that make up the federal division of Blackstone Technology Group (“("Blackstone ~~Federal”~~Federal"), for $85.5 million in cash. Blackstone Federal is headquartered in Arlington, ~~Virginia~~.Virginia. The acquisition expands the Company's capabilities in agile application development, cloud modernization and systems architecture, cybersecurity, user experience design and branding services to government clients and is part of the ECS Segment. The results of operations of Blackstone Federal are included in the consolidated results of the Company from the date of its acquisition. ~~The Company does not provide pro forma information for the Blackstone Federal acquisition due to its size.~~

The purchase accounting for the acquisition of Blackstone Federal remains incomplete with respect to the provisional fair value of assets acquired and liabilities assumed, as management continues to gather and evaluate information about circumstances that existed as of the acquisition date. Measurement period adjustments will be recognized prospectively within 12 months from the date of acquisition. Goodwill associated with this acquisition totaled $61.1 million, which is deductible for income tax purposes. Goodwill represents the acquired assembled workforce, potential new customers and future cash flows after the acquisition. Identifiable intangible assets related to this acquisition totaled $22.8 million, with useful lives ranging from one to nine years. The purchase accounting for this acquisition has been finalized.

Intersys ~~Acquisition~~

Consulting, LLC ("Intersys")

On October 17, 2019, the Company acquired all of the membership interests of Intersys, ~~Consulting, LLC~~ ~~("Intersys"),~~ headquartered in Austin, Texas,, for $67.0 million in cash. The acquisition expands the Company's capabilities in digital innovation and enterprise solutions and it is part of the Apex Segment. The results of operations of Intersys are included in the consolidated results of the Company from the date of its acquisition. ~~The Company does not provide pro forma information for the Intersys acquisition due to its size.~~

The purchase accounting for the acquisition of Intersys remains incomplete with respect to the provisional fair value of assets acquired and liabilities assumed, as management continues to gather and evaluate information about circumstances that existed as of the acquisition date. Measurement period adjustments will be recognized prospectively within 12 months from the date of acquisition. Goodwill associated with this acquisition totaled $41.4 million, of which $38.7 million is deductible for income tax purposes. Goodwill represents the acquired assembled workforce, potential new customers and future cash flows after the acquisition. Identifiable intangible assets related to this acquisition totaled $23.8 million, with useful lives ranging from three to ten years.

The purchase accounting for this acquisition has been finalized.

4. Goodwill and Identifiable Intangible Assets

~~The changes~~Changes in the carrying amount of goodwill by segment for the ~~six~~nine months ended ~~June~~September 30, 2020 and the year ended December 31, 2019 were as follows (in millions):


	Apex		Oxford		ECS		Total
Balance as of December 31, 2018	$	662.1	$	230.8	$	528.2	$	1,421.1
DHA acquisition	—		—		24.7		24.7
Intersys acquisition	41.4		—		—		41.4
Translation adjustment	—		(0.3)		—		(0.3)
Balance as of December 31, 2019	703.5		230.5		552.9		1,486.9
Blackstone Federal acquisition	—		—		61.1		61.1
LeapFrog acquisition	42.4		—		—		42.4
Translation adjustment	(0.4)		0.9		—		0.5
Balance as of September 30, 2020	$	745.5	$	231.4	$	614.0	$	1,590.9

Apex Oxford ECS Total
Balance as of December 31, 2018 $ 662.1
$ 230.8
$ 528.2
$ 1,421.1
DHA acquisition —
—
24.7
24.7
Intersys acquisition 41.4
—
—
41.4
Translation adjustment —
(0.3 ) —
(0.3 )
Balance as of December 31, 2019 703.5
230.5
552.9
1,486.9
Blackstone Federal acquisition —
—
61.1
61.1
Translation adjustment (0.5 ) (0.2 ) —
(0.7 )
Balance as of June 30, 2020 $ 703.0
$ 230.3
$ 614.0
$ 1,547.3

Acquired intangible assets consisted of the following (in millions):


		September 30, 2020						December 31, 2019
	Estimated Useful Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and contractual relationships	2 - 12.75	$	437.3	$	211.2	$	226.1	$	384.9	$	179.9	$	205.0
Contractor relationships	2 - 5	71.1		70.9		0.2		71.1		70.6		0.5
Backlog	1 - 2.75	28.3		27.1		1.2		25.0		23.9		1.1
Non-compete agreements	2 - 7	27.4		17.0		10.4		24.8		13.8		11.0
In-use software	6	18.9		18.9		0		18.9		18.9		0
		583.0		345.1		237.9		524.7		307.1		217.6
Trademarks (not amortized)		258.9		—		258.9		258.9		—		258.9
Total		$	841.9	$	345.1	$	496.8	$	783.6	$	307.1	$	476.5

June 30, 2020 December 31, 2019
Estimated Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Subject to amortization:
Customer and contractual relationships 2 - 12.75 $ 403.6
$ 200.4
$ 203.2
$ 384.9
$ 179.9
$ 205.0
Contractor relationships 2 - 5 71.1
70.7
0.4
71.1
70.6
0.5
Backlog 1 - 2.75 28.3
25.9
2.4
25.0
23.9
1.1
Non-compete agreements 2 - 7 25.6
15.9
9.7
24.8
13.8
11.0
In-use software 6 18.9
18.9
—
18.9
18.9
—
547.5
331.8
215.7
524.7
307.1
217.6
Not subject to amortization:
Trademarks 258.9
—
258.9
258.9
—
258.9
Total $ 806.4
$ 331.8
$ 474.6
$ 783.6
$ 307.1
$ 476.5

Estimated future amortization expense is as follows (in millions):


Remainder of 2020	$	13.5
2021	46.6
2022	38.4
2023	33.5
2024	26.2
Thereafter	79.7
	$	237.9

Remainder of 2020 $ 25.1
2021 41.0
2022 32.7
2023 28.0
2024 21.2
Thereafter 67.7
$ 215.7

5. Long-Term Debt

Long-term debt consisted of the following (in millions):


	September 30, 2020		December 31, 2019
Senior Secured Credit Facility:
$250 million revolving credit facility, due 2024	$	0	$	0
Term B loan facility, due 2025	490.8		490.8
Unsecured Senior Notes, due 2028	550.0		550.0
	1,040.8		1,040.8
Unamortized deferred loan costs	(7.6)		(8.5)
Total long-term debt	$	1,033.2	$	1,032.3

June 30,
2020 December 31,
2019
Senior Secured Credit Facility:
$250 million revolving credit facility, due 2024 $ —
$ —
Term B loan facility, due 2025 490.8
490.8
Unsecured Senior Notes, due 2028 550.0
550.0
1,040.8
1,040.8
Unamortized deferred loan costs (7.9 ) (8.5 )
Total Long-Term Debt $ 1,032.9
$ 1,032.3

Senior Secured Credit Facility

The senior secured credit facility ("Credit Facility") consists of a term B loan and a ~~senior secured~~ revolving credit facility with a maximum borrowing capacity of $250.0 million ~~(the "Revolver"~~("Revolver"). Borrowings under the term B loan bear interest at LIBOR plus 1.75 percent, or the bank’s base rate plus 0.75 percent. Borrowings under the Revolver bear interest at LIBOR plus 1.25 percent to 2.25 percent, or the bank’s base rate plus 0.25 to 1.25 percent, depending on leverage levels. At ~~June~~September 30, 2020, the Company had no outstanding borrowings under the Revolver and had $3.9 million in undrawn stand-by letters of credit to secure certain obligations. A commitment fee of 0.20 to 0.35 percent is payable on the undrawn portion of the Revolver. There are no required minimum payments on the Credit Facility and it is secured by substantially all of the Company's assets and includes various restrictive covenants. The Company is required to make mandatory prepayments on its term B loan from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events, subject to certain exceptions. The Revolver is limited to a maximum ratio of senior secured debt to trailing 12-months of ~~lender defined~~lender-defined consolidated EBITDA. At ~~June~~September 30, 2020, the Company was in compliance with its debt covenants.

Unsecured Senior Notes

The Company has $550.0 million of unsecured senior notes due in 2028 ~~(the "Senior~~("Senior Notes"). The Senior Notes bear interest at 4.625 percent, which is payable in arrears on May 15 and November 15 of each year. The Senior Notes are unsecured obligations and are subordinate to the Company's Credit Facility to the extent of the collateral securing such facility. The Senior Notes also contain certain customary limitations including, among other terms and conditions, the Company's ability to incur additional indebtedness, engage in mergers and acquisitions, transfer or sell assets and make certain distributions.

6. Commitments and Contingencies

The Company’s deferred compensation plan liability was ~~$12.2~~$13.1 million and $11.8 million at ~~June~~September 30, 2020 and December 31, 2019, respectively, and was primarily included in other ~~long-term~~noncurrent liabilities. The employees' deferred compensation is deposited in a rabbi trust (see Note ~~12.~~11. Fair Value Measurements).

The Company has operating leases for corporate offices, branch offices and data centers. NaN of these properties were owned indirectly by certain board members and an executive of the Company until they were sold to an unrelated party in June 2020.

The Company is involved in various legal proceedings, claims and litigation arising in the ordinary course of business. The Company does not believe that the disposition of matters that are pending or asserted will have a material effect on its condensed consolidated financial statements.

7. ~~Leases~~

Revenues

The Company has operating leases for corporate offices, branch offices and data centers. Two of these properties were owned indirectly by certain board members and an executive of the Company. Related-party rent expense for these properties was $0.2 million and $0.4 million for the three and
~~six months ended~~ ~~June 30, 2020, respectively; and $0.3 million and $0.6 million for the three and~~ ~~six months endedJune 30, 2019, respectively. In June 2020, these buildings were sold to an unrelated third party.~~

~~8. Revenues~~

The Company’s contracts have termination for convenience provisions and do not have substantive termination penalties; therefore, the contract duration for accounting purposes may be less than the stated terms. For accounting purposes, the Company's contracts with customers are considered to be of a short-term nature (one year or less). The Company does not disclose the value of remaining performance obligations for short-term contracts.

The Company has contract liabilities of ~~$12.1~~$6.8 million and $8.4 million at ~~June~~September 30, 2020 and December 31, 2019, respectively, for payments received in advance of providing services under certain contracts. Contract liabilities are included in other current liabilities on the condensed consolidated balance sheets and are generally recognized as revenues within three months from the balance sheet date.

8. Income Taxes

~~9. Income Taxes~~

For interim reporting periods, the Company’s provision for income taxes is calculated using its annualized estimated effective tax rate for the year. This rate is based on its estimated full year income and the related income tax expense for each jurisdiction in which the Company operates. The effective tax rate can be affected by changes in the geographical mix, permanent differences and the estimate of full year pretax accounting income. This rate is adjusted for the effects of discrete items occurring in the period.

~~10.~~9. Earnings per Share

The following is a reconciliation of the number of shares and share equivalents used to calculate basic and diluted earnings per share (in millions, except per share ~~data)~~amounts):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income	$	52.3	$	57.4	$	144.9	$	135.4

Weighted-average number of common shares outstanding - basic	52.5		52.8		52.6		52.7
Dilutive effect of share equivalents	0.5		0.6		0.5		0.7
Number of common shares and share equivalents outstanding - diluted	53.0		53.4		53.1		53.4

Basic earnings per share	$	1.00	$	1.09	$	2.75	$	2.57
Diluted earnings per share	$	0.99	$	1.08	$	2.73	$	2.54
Number of anti-dilutive share equivalents	0		0		0.2		0.2

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Net income $ 48.8
$ 43.1
$ 92.6
$ 78.0

Weighted-average number of common shares outstanding - basic 52.5
52.8
52.7
52.7
Dilutive effect of share equivalents 0.5
0.6
0.4
0.6
Number of common shares and share equivalents outstanding - diluted 53.0
53.4
53.1
53.3

Basic earnings per share $0.93 $0.82 $1.76 $1.48
Diluted earnings per share $0.92 $0.81 $1.74 $1.46
Anti-dilutive share equivalents ⁽¹⁾
0.5
0.2
0.3
0.3

~~_____~~

10. Segment Reporting

⁽¹⁾
Anti-dilutive stock-based awards that were excluded from the calculation of the number of shares used to compute diluted earnings per share because they were anti-dilutive when applying the treasury-stock method.

~~11. Segment Reporting~~

ASGN provides IT and professional staffing services in the technology, digital, creative, engineering and life sciences fields across commercial and government sectors. ASGN operates through its Apex, Oxford and ECS ~~segments.~~Segments. The Apex Segment provides technology, digital, creative, scientific, engineering staffing and consulting services to Fortune 1000 and mid-market clients across the United States and Canada. The Oxford Segment provides hard-to-find technology, digital, engineering and life sciences staffing and consulting services in select skill and geographic markets in the United States and Europe. The Company’s commercial business is comprised of the Apex and Oxford ~~segments.~~Segments. The ECS Segment, the Company’s federal government ~~IT solutions~~ business, delivers advanced solutions in cloud, cybersecurity, artificial intelligence, machine learning, application and IT modernization, science and engineering to U.S. defense, intelligence and federal civilian agencies. Virtually all of the Company's revenues are generated in the United States. Revenues from outside the United States accounted for less than 5.0 percent of consolidated revenues.

The Company has three major revenue ~~streams:~~sources: (i) contract, (ii) permanent placement and (iii) federal ~~government IT solutions.~~government. The Company’s contract revenues are comprised of assignment revenues and consulting revenues. Consulting services consist of deliverables-based projects including support service centers and managed projects such as software development.

The Company’s management evaluates the performance of each segment primarily based on revenues, gross profit and operating income. The information in the following tables is derived directly from internal financial reporting of the segments used for corporate management purposes.

The following tables present revenues, gross profit, operating income and amortization by segment (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Apex
Revenues	$	596.1	$	644.1	$	1,802.1	$	1,878.7
Gross profit	173.0		192.2		528.1		555.4
Operating income	69.4		79.2		202.3		213.1
Amortization	5.7		4.0		16.5		15.5
Oxford
Revenues	$	127.2	$	152.5	$	396.1	$	455.3
Gross profit	52.1		61.9		157.8		183.3
Operating income	12.1		13.6		31.0		36.3
Amortization	0.2		1.0		0.5		3.0
ECS
Revenues	$	288.6	$	206.1	$	741.0	$	564.7
Gross profit	45.9		37.3		126.8		101.8
Operating income	16.7		12.7		44.3		30.5
Amortization	7.0		6.9		20.6		20.3
Consolidated
Revenues	$	1,011.9	$	1,002.7	$	2,939.2	$	2,898.7
Gross profit	271.0		291.4		812.7		840.5
Operating income(1)	80.9		90.9		227.8		226.9
Amortization	12.9		11.9		37.6		38.8

___________________ (1) Consolidated operating income includes corporate operating expenses, which are not allocated to the segments, consisting of consolidated stock-based compensation expense, compensation for corporate employees, acquisition, integration and strategic planning expenses, public company expenses and depreciation expense for corporate assets.

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Apex
Revenues $ 576.9
$ 628.5
$ 1,206.0
$ 1,234.6
Gross profit 170.6
187.8
355.1
363.2
Operating income 66.0
72.9
133.1
133.9
Amortization 5.5
5.5
10.8
11.5
Oxford
Revenues $ 120.2
$ 153.2
$ 268.9
$ 302.8
Gross profit 46.4
62.5
105.7
121.4
Operating income 7.8
11.0
18.9
22.7
Amortization 0.1
1.0
0.3
2.0
ECS
Revenues $ 239.7
$ 190.6
$ 452.4
$ 358.6
Gross profit 43.8
34.9
80.9
64.5
Operating income 16.2
10.9
27.5
17.8
Amortization 7.0
6.6
13.6
13.4
Consolidated
Revenues $ 936.8
$ 972.3
$ 1,927.3
$ 1,896.0
Gross profit 260.8
285.2
541.7
549.1
Operating income⁽¹⁾
76.0
73.3
146.9
136.0
Amortization 12.6
13.1
24.7
26.9

~~____________~~


⁽¹⁾	Consolidated operating income includes corporate operating expenses, which are not allocated to the segments, consisting of consolidated stock-based compensation expense, compensation for corporate employees, acquisition, integration and strategic planning expenses, public company expenses and depreciation expense for corporate assets.

The following table presents segment revenues by type (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Apex
Assignment	$	492.2	$	544.7	$	1,502.3	$	1,598.0
Consulting	96.6		85.1		271.5		237.0
Permanent placement	7.3		14.3		28.3		43.7
	596.1		644.1		1,802.1		1,878.7
Oxford
Assignment	$	95.8	$	115.3	$	306.9	$	350.0
Consulting	14.1		15.0		38.4		41.1
Permanent placement	17.3		22.2		50.8		64.2
	127.2		152.5		396.1		455.3
ECS
Firm-fixed-price	$	82.0	$	64.4	$	201.2	$	153.8
Time and materials	80.8		68.4		234.6		200.6
Cost reimbursable	125.8		73.3		305.2		210.3
	288.6		206.1		741.0		564.7
Consolidated	$	1,011.9	$	1,002.7	$	2,939.2	$	2,898.7

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Apex
Contract —
Assignment $ 483.8
$ 533.5
$ 1,010.1
$ 1,053.3
Consulting 85.3
79.5
174.9
151.9
569.1
613.0
1,185.0
1,205.2
Permanent placement 7.8
15.5
21.0
29.4
576.9
628.5
1,206.0
1,234.6
Oxford
Contract —
Assignment $ 96.2
$ 117.1
$ 211.1
$ 234.7
Consulting 11.1
14.3
24.3
26.1
107.3
131.4
235.4
260.8
Permanent placement 12.9
21.8
33.5
42.0
120.2
153.2
268.9
302.8
ECS
Firm-fixed-price $ 63.5
$ 46.1
$ 120.5
$ 89.4
Time and materials 81.4
70.8
153.8
132.2
Cost reimbursable 94.8
73.7
178.1
137.0
239.7
190.6
452.4
358.6
Consolidated $ 936.8
$ 972.3
$ 1,927.3
$ 1,896.0

~~The Company operates internationally, with operations mainly in the United States. The following table presents revenues within and outside of the United States (in millions):~~

Three Months Ended Six Months Ended
June 30, June 30,
2020 % 2019 % 2020 % 2019 %
Revenues:
Domestic $ 897.9
95.8 % $ 929.8
95.6 % $ 1,843.3
95.6 % $ 1,810.9
95.5 %
Foreign 38.9
4.2 % 42.5
4.4 % 84.0
4.4 % 85.1
4.5 %
$ 936.8
100.0 % $ 972.3
100.0 % $ 1,927.3
100.0 % $ 1,896.0
100.0 %

The following table presents the ECS ~~segment~~Segment (federal government ~~IT solutions)~~business) revenues by customer type (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Department of Defense and Intelligence Agencies	$	172.0	$	112.6	$	414.4	$	316.2
Federal Civilian	96.2		82.0		276.1		213.5
Other	20.4		11.5		50.5		35.0
	$	288.6	$	206.1	$	741.0	$	564.7

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Department of Defense and Intelligence Agencies $ 127.1
$ 107.6
$ 242.0
$ 203.6
Federal Civilian 96.0
71.3
180.6
131.5
Other 16.6
11.7
29.8
23.5
$ 239.7
$ 190.6
$ 452.4
$ 358.6

~~12.~~11. Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued payroll and contract professional pay approximate their fair value based on their short-term nature. The carrying amount of long-term debt recorded in the Company’s condensed consolidated balance sheet at ~~June~~September 30, 2020 was $1.0 billion and approximated its fair value (see Note 5. Long-Term Debt), which was determined using quoted prices in active markets for identical liabilities (Level 1 inputs).

The Company has a deferred compensation plan and the employees' deferred compensation is deposited in a rabbi trust. This rabbi trust had investments, primarily mutual funds, of ~~$12.2~~$13.1 million and $11.8 million at ~~June~~September 30, 2020 and December 31, 2019, respectively, which are measured at fair value using the net asset value per share. These assets were primarily included in other ~~non-current~~noncurrent assets.

Certain assets, such as goodwill and trademarks, are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as, when there is evidence of impairment (see Note 1. General for discussion of our assessment performed ~~in the current quarter)~~as of September 30, 2020). The fair value assigned to identifiable intangible assets is primarily determined using a discounted cash flow method (a non-recurring fair value measurement based on Level 3 inputs). All assets and liabilities of acquired companies are recorded at their estimated fair values at the dates of acquisition.

Item 2 -— Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are based upon current expectations, as well as management's beliefs and assumptions and involve a high degree of risk and uncertainty. Anystatements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statements that include the words ~~“believes,” “anticipates,” “plans,” “expects,” “intends,”~~"believes," "anticipates," "plans," "expects," "intends," and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Forward-looking statements include statements regarding our anticipated financial and operating performance for future periods. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences include, but are not limited to, the following: (1) the impact of the COVID-19 global pandemic on our competitive position and demand for our services; (2) the availability of qualified contract professionals and our ability to attract, train and retain them; (3) our ability to remain competitive in obtaining and retaining clients; (4) management of our growth; (5) continued performance and integration of our enterprise-wide information systems; (6) our ability to manage our litigation matters; (7) the successful integration of our acquired subsidiaries; (8) maintenance of our ECS Segment contract backlog; and (9) the factors described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 (“("2019 ~~10-K”~~10-K") and this form 10-Q under the section titled ~~“Risk~~"Risk Factors.”" Other factors also may contribute to the differences between our forward-looking statements and our actual results. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the filing date of this Quarterly Report on Form 10-Q and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ.

OVERVIEW

We provide IT and professional staffing services in the technology, digital, creative, engineering and life sciences fields across commercial and federal government sectors. ~~We operate through~~Our commercial business is comprised of our Apex and Oxford ~~and ECS segments.~~Segments. The Apex Segment provides technology, digital, creative, scientific, engineering staffing and consulting services to Fortune 1000 and mid-market clients across the United States and Canada. The Oxford Segment provides hard-to-find technology, digital, engineering and life sciences staffing and consulting services in select skill and geographic markets in the United States and Europe. Our ~~commercial~~federal government business is comprised of ~~the Apex and Oxford segments. The~~our ECS Segment, which provides IT solutions to the federal government, including advanced solutions in cloud, cybersecurity, artificial intelligence, machine learning, application and IT modernization.

We have three major revenue ~~streams:~~sources: (i) contract, (ii) permanent placement and (iii) federal ~~government IT solutions.~~government. Our contract revenues are comprised of assignment and consulting revenues. Consulting services consist of deliverables-based projects including support service centers and managed projects such as software development.

The Impact of COVID-19 on our Results and Operations

~~In March~~Our financial performance for the quarter and the first nine months of 2020 was adversely affected by lower demand from our commercial customers related to the ~~World Health Organization declared~~ COVID-19 ~~a global pandemic.~~pandemic, which was partially offset by high growth in our federal government business. In mid-March of this year, we began ~~to experience~~experiencing week-to-week revenue declines in ~~revenues from~~ our commercial business, which continued through the first half of the second quarter. In the second half of ~~the second~~that quarter, ~~week-to-week revenues flattened and remained stable~~weekly production levels improved, which has continued through the ~~first three weeks~~third week of ~~July.~~the fourth quarter. Over that same period, we saw double-digit year-over-year revenue growth in our federal government ~~IT solutions~~ business.

~~Consolidated revenues for~~For the ~~second~~fourth quarter of 2020, ~~were~~we expect consolidated revenues will be down ~~3.6~~from the third quarter due to 3.5 fewer Billable Days and lower revenues from certain federal government programs that experienced high volume in the third quarter of 2020. On a per Billable Day basis, we estimate our commercial business will be up 4.0 to 4.5 percent over the third quarter of 2020. We also estimate our federal government business will be up slightly above 10.0 percent year over ~~year. Revenues from our two largest divisions, Apex Systems and ECS, combined accounted for 79.9 percent of consolidated revenues and were up 4.4 percent~~ year despite the very high fourth quarter 2019 comparable, which grew over year. Apex Systems, our largest division with 54.3 percent of consolidated revenues, was down 3.4 percent year over year. Our other divisions, which include creative marketing and permanent placement, were down 26.230 percent year over year and ~~accounted for 20.1 percent of consolidated revenues. ECS, our second largest division with 25.6 percent of consolidated revenues, was up 25.8 percent year over year.~~

~~For the third quarter of 2020, we expect ECS to continue to grow by double digits year over year and Apex Systems to outperform the commercial IT services market. We also expect~~included $34.4 million in revenues from ~~our creative marketing and permanent placement divisions to continue to be down double-digits year over year until we see a return to economic growth.~~the early renewal of software licenses. While we believe these are reasonable expectations, any worsening of the COVID-19 pandemic could adversely affect our results for the ~~quarter and remainder of the year.~~fourth quarter.

CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2020 COMPARED WITH THE THREE MONTHS ENDED SEPTEMBER 30, 2019 AND THE THREE MONTHS ENDED JUNE 30, ~~2019~~2020

Revenues

Revenues for the quarter were ~~$936.8 million, a decrease~~$1.01 billion, an increase of ~~3.6~~0.9 percent from the ~~second~~third quarter of ~~2019.~~ 2019 and up 8.0 percent sequentially. This performance was driven by the high growth of our federal government business and the growth of all of our commercial divisions from the trough-level revenues experienced in late May of 2020. Revenues from our commercial business, which accounted for 71.5 percent of total revenues, were down year over year due to lower customer demand caused by the COVID-19 pandemic. Revenues from our federal government business, which accounted for 28.5 percent of total revenues, were up year over year reflecting increased volume on certain existing programs, new contract awards and the contribution from Blackstone Federal, which was acquired in January of this year.

The table below shows our ~~commercial~~revenues by business and ~~federal government IT solutions revenues, as well as revenues~~ by segment for the three months ended ~~June~~September 30, 2020 and 2019 and the three months ended June 30, 2020 (in millions):


											% of Total
	September 30,				June 30,		Change				September 30,				June 30,		Change
	2020		2019		2020		Y-Y		Seq.		2020		2019		2020		Y-Y		Seq.
Business
Commercial
Assignment	$	588.0	$	660.0	$	580.0	-10.9	%	1.4	%	58.2	%	65.8	%	61.9	%	-7.6	%	-3.7	%
Consulting	110.7		100.1		96.4		10.6	%	14.8	%	10.9	%	10.0	%	10.3	%	0.9	%	0.6	%
Contract	698.7		760.1		676.4		-8.1	%	3.3	%	69.1	%	75.8	%	72.2	%	-6.7	%	-3.1	%
Permanent placement	24.6		36.5		20.7		-32.6	%	18.8	%	2.4	%	3.6	%	2.2	%	-1.2	%	0.2	%
Commercial	723.3		796.6		697.1		-9.2	%	3.7	%	71.5	%	79.4	%	74.4	%	-7.9	%	-2.9	%
Federal Government	288.6		206.1		239.7		40.0	%	20.4	%	28.5	%	20.6	%	25.6	%	7.9	%	2.9	%
Consolidated	$	1,011.9	$	1,002.7	$	936.8	0.9	%	8.0	%	100.0	%	100.0	%	100.0	%

Segment
Apex	$	596.1	$	644.1	$	576.9	-7.5	%	3.3	%	58.9	%	64.2	%	61.6	%	-5.3	%	-2.7	%
Oxford	127.2		152.5		120.2		-16.6	%	5.8	%	12.6	%	15.2	%	12.8	%	-2.6	%	-0.2	%
ECS	288.6		206.1		239.7		40.0	%	20.4	%	28.5	%	20.6	%	25.6	%	7.9	%	2.9	%
Consolidated	$	1,011.9	$	1,002.7	$	936.8	0.9	%	8.0	%	100.0	%	100.0	%	100.0	%

% of Consolidated Revenues
2020 2019 Chg. 2020 2019 Chg.
Revenues by Business
Commercial
Contract —
Assignment $ 580.0
$ 650.6
(10.8 )% 61.9 % 67.0 % (5.1 )%
Consulting 96.4
93.8
2.8 % 10.3 % 9.6 % 0.7 %
676.4
744.4
(9.1 )% 72.2 % 76.6 % (4.4 )%
Permanent placement 20.7
37.3
(44.8 )% 2.2 % 3.8 % (1.6 )%
Total Commercial 697.1
781.7
(10.8 )% 74.4 % 80.4 % (6.0 )%
Federal Government IT Solutions 239.7
190.6
25.8 % 25.6 % 19.6 % 6.0 %
Consolidated $ 936.8
$ 972.3
(3.6 )% 100.0 % 100.0 %

Revenues by Segment
Apex $ 576.9
$ 628.5
(8.2 )% 61.6 % 64.6 % (3.0 )%
Oxford 120.2
153.2
(21.5 )% 12.8 % 15.8 % (3.0 )%
ECS 239.7
190.6
25.8 % 25.6 % 19.6 % 6.0 %
Consolidated $ 936.8
$ 972.3
(3.6 )% 100.0 % 100.0 %

Commercial Business— Revenues from our commercial business were ~~$697.1 million (74.4 percent of consolidated revenues) for the quarter,~~ down ~~$84.6 million or 10.8~~9.2 percent year over year ~~due~~resulting from lower customer demand attributable to the COVID-19 pandemic. On a sequential basis, revenues were up 3.7 percent with all commercial divisions experiencing growth over the second quarter of 2020. Contract revenues, ~~declined week to week through the first half of the quarter and flattened in the second half. Permanent~~which exclude permanent placement revenues, were down ~~44.8~~8.1 percent year over year; and permanent placement revenues, which accounted for 2.4 percent of consolidated revenues, were down 32.6 percent year over year.

Our predominately commercial IT services divisions (Apex Systems and Oxford Core), which together accounted for 87.5 percent of commercial revenues, were down 5.0 percent year over year, ~~and accounted for 2.2~~but increased 3.1 percent ~~of consolidated revenues. Over half of the year-over-year decline in revenues was from our~~sequentially. Our creative marketing and permanent placement divisions (Creative Circle and CyberCoders), which combined accounted for ~~8.9~~12.5 percent of ~~consolidated revenues. The remaining decline in~~commercial revenues, ~~was from our predominantly IT services divisions, which~~ were down ~~6.2 percent. These divisions accounted for 65.5~~30.6 percent ~~of consolidated revenues.~~year over year, but increased 8.2 percent sequentially.

From an industry perspective, ~~we view~~ our ~~contract~~commercial revenues infall into five industry verticals (financial ~~services,~~services; consumer and industrials; healthcare; technology, media and ~~telecom;~~telecom ("TMT"); and business and government services). ~~Four of the five verticals showed double-digit declines, but financial~~Financial services, our largest industry vertical (24.6 percent of commercial revenues), was up ~~by 9.1 percent.~~11.1 percent year over year, while the other four industry verticals were all down. All industry verticals, except TMT, experienced sequential growth.

Revenues from ~~the~~our Apex Segment were ~~$576.9 million (61.6 percent of consolidated revenues),~~ down ~~8.2~~7.5 percent year over ~~year.~~year resulting from lower customer demand attributable to the pandemic. On a sequential basis, revenues were up 3.3 percent. Revenues from ~~the largest division~~Apex Systems, which accounted for 88.1 percent of the ~~segment, Apex Systems, accounted for 54.3 percent of consolidated~~segment’s revenues, ~~and~~ were down ~~3.4~~2.6 percent year over ~~year.~~year, but were up 3.3 percent sequentially. Revenues from the segment's creative marketing division were down ~~33.2~~32.4 percent year over year, ~~and accounted for 7.3~~but were up 3.6 percent ~~of consolidated revenues.~~sequentially.

Revenues from ~~the~~our Oxford Segment were ~~$120.2 million (12.8 percent of consolidated revenues),~~ down ~~21.5 percent year over year. The decline was primarily due to Oxford's permanent placement division, which was down 41.0~~16.6 percent year over year ~~and accounted for approximately 59.5~~primarily resulting from lower customer demand attributable to the pandemic, but were up 5.8 percent ~~of consolidated~~sequentially as our permanent placement ~~revenues.~~and consulting revenues showed improvement throughout the quarter.

Federal Government ~~IT Solutions~~ Business — Revenues from our federal government ~~IT solutions~~ business were ~~$239.7 million (25.6 percent of consolidated revenues),~~ up ~~25.8~~40.0 percent year over ~~year.~~year and 20.4 percent sequentially. This ~~increase resulted from the~~ growth ~~in artificial intelligence, machine learning and cloud services and solutions,~~was driven by a number of factors including, increased volume on certain existing programs, new contract awards and the contribution from Blackstone Federal, ~~that~~which was acquired in January ~~2020.~~of this year. Revenues from existing programs included a $38.5 million sequential increase under cost reimbursable contracts related to artificial intelligence/machine learning ("AI/ML") solutions and the development and expansion of unclassified networks.

~~Gross Profit and Gross Margin~~

~~The table below shows gross profit and gross margin by type and segment for the three months ended June 30, 2020 and 2019 (in millions):~~

Gross Profit Gross Margin
2020 2019 Chg. 2020 2019 Chg.
Commercial $ 217.0
$ 250.3
(13.3 )% 31.1 % 32.0 % (0.9 )%
Federal Government IT Solutions 43.8
34.9
25.5 % 18.3 % 18.3 % — %
Consolidated $ 260.8
$ 285.2
(8.6 )% 27.8 % 29.3 % (1.5 )%

Contract:⁽¹⁾

Commercial $ 196.3
$ 213.0
(7.8 )% 29.0 % 28.6 % 0.4 %
Federal Government IT Solutions 43.8
34.9
25.5 % 18.3 % 18.3 % — %
Total $ 240.1
$ 247.9
(3.1 )% 26.2 % 26.5 % (0.3 )%

By Segment
Apex $ 170.6
$ 187.8
(9.2 )% 29.6 % 29.9 % (0.3 )%
Oxford 46.4
62.5
(25.8 )% 38.6 % 40.8 % (2.2 )%
ECS 43.8
34.9
25.5 % 18.3 % 18.3 % — %
Consolidated $ 260.8
$ 285.2
(8.6 )% 27.8 % 29.3 % (1.5 )%

~~____________~~


⁽¹⁾	~~Contract gross profit and margin excludes permanent placement.~~

Gross profit is comprised of revenues less costs of services, which consist primarily of compensation for our contract professionals, allowable materials and reimbursable out-of-pocket expenses. Gross profit was $260.8 million, down 8.6 percent year over year due to the overall decline in revenues. Gross margin was 27.8 percent, a compression of 150 basis points year over year primarily due to the precipitous year-over-year decline in permanent placement revenues, which are essentially 100 percent gross profit. Contract gross margin was 26.2 percent, down 30 basis points year over year, related to the higher mix of federal government IT solutions revenues, which have lower margins than our commercial business. The EBITDA margin for the federal government IT solutions business is slightly lower than our consolidated margin.

Gross profit for the Apex Segment was down 9.2 percent on an 8.2 percent decrease in revenues. Gross margin for the segment was 29.6 percent, down 30 basis points year over year related to the decline in permanent placement revenues. The segment's contract gross margin, which excludes permanent placement, was 28.6 percent, up 50 basis points year over year, reflecting lower travel and healthcare expenses and a higher bill/pay spread. Gross profit for the Oxford Segment was down 25.8 percent on a 21.5 percent decline in revenues. Gross margin for the segment was 38.6 percent, a decrease of 220 basis points year over year mainly due to the decrease in permanent placement revenues, partially offset by a 30 basis point expansion in contract gross margin. Gross profit for the ECS Segment was up 25.5 percent on revenue growth of 25.8 percent. Gross margin for the segment held steady at 18.3 percent.

~~Selling, General and Administrative Expenses~~

Selling, general and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, rent, information systems, marketing, telecommunications, public company expenses and other general and administrative expenses. SG&A expenses for the second quarter were $172.2 million (18.4 percent of revenues), a year-over-year reduction of $26.6 million and a 200 basis point reduction in SG&A expense as a percent of revenues. This improvement in SG&A expenses was largely due to lower incentive compensation (mainly for bonuses and commissions tied to growth in revenues or Adjusted EBITDA), travel expenses, healthcare and stock-based compensation expenses. SG&A expenses in the prior-year period included a $3.3 million charge related to the write-off of certain foreign trademarks.

~~Amortization of Intangible Assets~~

Amortization of intangible assets was $12.6 million, down from $13.1 million in the second quarter of 2019. The lower expense in the current quarter was due to the accelerated amortization method of certain acquired intangibles, which have higher amortization rates at the beginning of their useful lives.

~~Interest Expense~~

Interest expense decreased $4.3 million or 30.7 percent to $9.7 million, compared with $14.0 million in the second quarter of 2019. This decrease was primarily due to a decrease in LIBOR and a 25 basis point reduction in the spread on our senior secured credit facility resulting from our capital restructuring in the fourth quarter of 2019. Interest expense for the quarter was comprised of $6.3 million of interest on the 4.625 percent senior notes, $3.0 million of interest on the senior secured credit facility and $0.4 million of amortization of deferred loan costs. The weighted-average interest rate in the current quarter was 3.5 percent, down from 4.5 percent in the second quarter of 2019. The weighted-average borrowings outstanding during the period were $1.0 billion and $1.1 billion in the second quarter of 2020 and 2019, respectively.

~~Provision for Income Taxes~~

The provision for income taxes was $17.5 million for the current quarter of 2020, up from $16.2 million in the second quarter of last year. The effective tax rate for the current quarter was 26.3 percent, compared with 27.3 percent in the second quarter of last year.

~~Net Income~~

Net income increased $5.7 million or 13.3 percent to $48.8 million for the current quarter from $43.1 million in the same period of 2019. The increase primarily related to the decrease in SG&A expenses and interest expense.

~~CONSOLIDATED RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2020 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 2019~~

~~Revenues~~

Revenues for the first six months of 2020 were $1.93 billion, an increase of 1.7 percent year over year. The table below shows our commercial and federal government IT solutions revenues, as well as revenues by segment for the six months ended June 30, 2020 and 2019 (in millions):

% Consolidated Revenues
2020 2019 Chg. 2020 2019 Chg.
Revenues by Business
Commercial
Contract —
Assignment $ 1,221.2
$ 1,288.0
(5.2 )% 63.4 % 67.9 % (4.5 )%
Consulting 199.2
178.0
11.9 % 10.3 % 9.4 % 0.9 %
1,420.4
1,466.0
(3.1 )% 73.7 % 77.3 % (3.6 )%
Permanent placement 54.5
71.4
(23.7 )% 2.8 % 3.8 % (1.0 )%
Total Commercial 1,474.9
1,537.4
(4.1 )% 76.5 % 81.1 % (4.6 )%
Federal Government IT Solutions 452.4
358.6
26.2 % 23.5 % 18.9 % 4.6 %
Consolidated $ 1,927.3
$ 1,896.0
1.7 % 100.0 % 100.0 %

Revenues by Segment
Apex $ 1,206.0
$ 1,234.6
(2.3 )% 62.5 % 65.1 % (2.6 )%
Oxford 268.9
302.8
(11.2 )% 14.0 % 16.0 % (2.0 )%
ECS 452.4
358.6
26.2 % 23.5 % 18.9 % 4.6 %
Consolidated $ 1,927.3
$ 1,896.0
1.7 % 100.0 % 100.0 %

~~Commercial Business~~ ~~— Revenues from our commercial business were $1.5 billion (76.5 percent of consolidated revenues) for the first half of 2020, down $62.5 million~~ or 4.1 percent year over year due to the COVID-19 pandemic. In mid-March, we began to experience week-to-week declines in revenues from our commercial business, which continued through the first half of the second quarter. In the second half of the second quarter, week-to-week revenues flattened. Contract revenues were down 3.1 percent year over year and accounted for 73.7 percent of consolidated revenues. Permanent placement revenues were down 23.7 percent year over year and accounted for 2.8 percent of consolidated revenues. Most of the revenue decline was from our creative marketing and permanent placement divisions, which accounted for 10.7 percent of consolidated revenues. The remaining decline in revenues was from our predominantly IT services divisions, which were down 1.5 percent. These divisions accounted for 65.8 percent of consolidated revenues.

From an industry perspective, we view our contract revenues in five industry verticals (financial services, consumer and industrials; healthcare; technology, media and telecom; and business and government services). In the first half of 2020, we saw declines across most of the industry verticals the commercial businesses we serve, with the exception of growth in our largest vertical, financial services.

Revenues from our Apex Segment were $1.2 billion (62.5 percent of our consolidated revenues), down 2.3 percent year over year. Revenues from the largest division of the segment, Apex Systems, accounted for 53.9 percent of consolidated revenues and were consistent with the prior-year period. Revenues from the segment's creative marketing division were down 16.4 percent year over year and accounted for 8.7 percent of consolidated revenues.

Revenues from our Oxford Segment were $268.9 million (14.0 percent of our consolidated revenues), down 11.2 percent year over year. The decline was primarily due to Oxford's permanent placement division, which was down 19.6 percent year over year, and accounted for approximately 59.3 percent of consolidated permanent placement revenues.

~~Federal Government IT Solutions Business~~ — Revenues from our federal government IT solutions business were $452.4 million (23.5 percent of consolidated revenues), up 26.2 percent year over year. This increase resulted from the growth in artificial intelligence, machine learning and cloud services and solutions, new contract awards and the contribution from Blackstone Federal that was acquired in January 2020.

Gross Profit and Gross Margin

The table below shows gross profit and gross margin by ~~type~~business and by segment for the ~~six~~three months ended September 30, 2020 and 2019 and June 30, 2020 (in millions):


	Gross Profit										Gross Margin
	September 30,				June 30,		Change				September 30,				June 30,		Change
	2020		2019		2020		Y-Y		Seq.		2020		2019		2020		Y-Y		Seq.
Business
Commercial	$	225.1	$	254.1	$	217.0	-11.4	%	3.7	%	31.1	%	31.9	%	31.1	%	-0.8	%	—
Federal Government	45.9		37.3		43.8		23.1	%	4.8	%	15.9	%	18.1	%	18.3	%	-2.2	%	-2.4	%
Consolidated	$	271.0	$	291.4	$	260.8	-7.0	%	3.9	%	26.8	%	29.1	%	27.8	%	-2.3	%	-1.0	%

Contract
Commercial	$	200.6	$	217.7	$	196.3	-7.9	%	2.2	%	28.7	%	28.6	%	29.0	%	0.1	%	-0.3	%
Federal Government	45.9		37.3		43.8		23.1	%	4.8	%	15.9	%	18.1	%	18.3	%	-2.2	%	-2.4	%
	$	246.5	$	255.0	$	240.1	-3.3	%	2.7	%	25.0	%	26.4	%	26.2	%	-1.4	%	-1.2	%
Segment
Apex	$	173.0	$	192.2	$	170.6	-10.0	%	1.4	%	29.0	%	29.8	%	29.6	%	-0.8	%	-0.6	%
Oxford	52.1		61.9		46.4		-15.8	%	12.3	%	40.9	%	40.6	%	38.6	%	0.3	%	2.3	%
ECS	45.9		37.3		43.8		23.1	%	4.8	%	15.9	%	18.1	%	18.3	%	-2.2	%	-2.4	%
Consolidated	$	271.0	$	291.4	$	260.8	-7.0	%	3.9	%	26.8	%	29.1	%	27.8	%	-2.3	%	-1.0	%

____________

Note: Contract gross profit and margin exclude permanent placement revenues.

Gross margin for the quarter was down year over year due to changes in business mix stemming from the decline in permanent placement revenues and the high revenue growth of our federal government business, which carries lower gross margins than our commercial business. Gross margin on federal government revenues was lower than the third quarter of last year due to increased volume from certain programs under cost reimbursable contracts, which typically have lower margins than other contract types.

The contract gross margin for the commercial business, which excludes the effects of permanent placement revenues, was up slightly year over year. This improvement reflected, among other things, the higher contribution of consulting revenues and lower billable consultant expenses, which are generally passed through to the customer with no markup.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, rent, information systems, marketing, telecommunications, public company expenses and other general and administrative expenses. SG&A expenses for the third quarter were $177.2 million (17.5 percent of revenues), a year-over-year reduction of $11.4 million and a 130 basis point reduction in SG&A expense as a percent of revenues. This improvement related to effective expense management, as well as lower incentive compensation and travel expenses.

Amortization of Intangible Assets

Amortization of intangible assets was $12.9 million, up from $11.9 million in the third quarter of 2019. This increase relates to the effects of recently acquired businesses.

Interest Expense

Interest expense was $9.3 million, down 26.8 percent from the third quarter of 2019. This improvement was the result of (i) a reduction in LIBOR, (ii) a 25-basis point reduction in the spread on our Credit Facility resulting from our capital restructuring in the fourth quarter of 2019 and (iii) lower amortization of deferred loan costs.

Interest expense for the quarter was comprised of $6.4 million of interest on the Senior Notes, $2.5 million of interest on the Credit Facility and $0.4 million deferred loan fee amortization. The weighted-average borrowings outstanding were $1.0 billion for the third quarter of 2020 and 2019. The weighted-average interest rate in the current quarter was 3.4 percent, down from 4.3 percent in the third quarter of 2019.

Provision for Income Taxes

The provision for income taxes was $19.3 million for the current quarter of 2020, down from $20.7 million in the third quarter of 2019. The effective tax rate for the current quarter was 27.0 percent, which was slightly higher than the third quarter of last year.

Net Income

Net income decreased $5.1 million year over year or 8.9 percent to $52.3 million for the current quarter from $57.4 million in the third quarter of 2019. This decrease related to the year-over-year decline in commercial revenues and gross profit from lower customer demand attributable to the COVID-19 pandemic.

CONSOLIDATED RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED WITH THE NINE MONTHS ENDED SEPTEMBER 30, 2019

Revenues

Revenues for the first nine months of 2020 were $2.9 billion, an increase of 1.4 percent year over year, primarily driven by the high growth of our federal government business. Revenues from our commercial business, which accounted for 74.8 percent of total revenues, were down year over year resulting from lower customer demand caused by the COVID-19 pandemic. Revenues from our federal government business, which accounted for 25.2 percent of total revenues, were up reflecting increased volume on certain existing programs, new contract awards and the contribution from Blackstone Federal, which was acquired in January of this year.

The table below shows our revenues by business and by segment for the nine months ended September 30, 2020 and 2019 (in millions):


							% of Total
	2020		2019		Change		2020		2019		Change
Business
Commercial
Assignment	$	1,809.2	$	1,948.0	-7.1	%	61.6	%	67.2	%	-5.6	%
Consulting	309.9		278.1		11.4	%	10.5	%	9.6	%	0.9	%
Contract	2,119.1		2,226.1		-4.8	%	72.1	%	76.8	%	-4.7	%
Permanent placement	79.1		107.9		-26.7	%	2.7	%	3.7	%	-1.0	%
Commercial	2,198.2		2,334.0		-5.8	%	74.8	%	80.5	%	-5.7	%
Federal Government	741.0		564.7		31.2	%	25.2	%	19.5	%	5.7	%
Consolidated	$	2,939.2	$	2,898.7	1.4	%	100.0	%	100.0	%
Segment
Apex	$	1,802.1	$	1,878.7	-4.1	%	61.3	%	64.8	%	-3.5	%
Oxford	396.1		455.3		-13.0	%	13.5	%	15.7	%	-2.2	%
ECS	741.0		564.7		31.2	%	25.2	%	19.5	%	5.7	%
Consolidated	$	2,939.2	$	2,898.7	1.4	%	100.0	%	100.0	%

Commercial Business — Revenues from our commercial business were down 5.8 percent year over year resulting from lower customer demand attributable to the COVID-19 pandemic. Contract revenues, which exclude permanent placement revenues, were down 4.8 percent resulting from a decline in assignment revenues partially offset by an increase in consulting revenues. Permanent placement revenues, which accounted for 2.7 percent of consolidated revenues, were down 26.7 percent.

Our predominately commercial IT services divisions (Apex Systems and Oxford Core), which together accounted for 86.5 percent of commercial revenues, were down 2.7 percent. Our creative marketing and permanent placement divisions (Creative Circle and CyberCoders), which combined accounted for 13.5 percent of commercial revenues, were down 21.9 percent.

From an industry perspective, our commercial revenues fall into five industry verticals (financial services; consumer and industrials; healthcare; technology, media and telecom; and business and government services). Four of our five industry verticals showed declines year over year. However, financial services, our largest industry vertical (22.3 percent of commercial revenues), was up 10.3 percent.

Revenues from our Apex Segment were down 4.1 percent year over year resulting from lower customer demand attributable to the COVID-19 pandemic. Revenues from Apex Systems, which accounted for 86.8 percent the segment's revenues, were about the same as the prior year period. Revenues from the segment's creative marketing division were down 21.9 percent.

Revenues from our Oxford Segment were down 13.0 percent primarily resulting from lower customer demand attributable to the COVID-19 pandemic.

Federal Government Business — Revenues from our federal government business were up 31.2 percent. This increase was driven by a number of factors including, increased volume on certain existing programs (mainly AI/ML solutions and development/expansion of unclassified networks), new contract awards and the contribution from Blackstone Federal, which was acquired in January 2020.

Gross Profit Gross Margin
2020 2019 Chg. 2020 2019 Chg.
Commercial $ 460.8
$ 484.6
(4.9 )% 31.2 % 31.5 % (0.3 )%
Federal Government IT Solutions 80.9
64.5
25.4 % 17.9 % 18.0 % (0.1 )%
Consolidated $ 541.7
$ 549.1
(1.3 )% 28.1 % 29.0 % (0.9 )%

Contract:⁽¹⁾

Commercial $ 406.3
$ 413.2
(1.7 )% 28.6 % 28.2 % 0.4 %
Federal Government IT Solutions 80.9
64.5
25.4 % 17.9 % 18.0 % (0.1 )%
Total $ 487.2
$ 477.7
2.0 % 26.0 % 26.2 % (0.2 )%

By Segment
Apex $ 355.1
$ 363.2
(2.2 )% 29.4 % 29.4 % — %
Oxford 105.7
121.4
(12.9 )% 39.3 % 40.1 % (0.8 )%
ECS 80.9
64.5
25.4 % 17.9 % 18.0 % (0.1 )%
Consolidated $ 541.7
$ 549.1
(1.3 )% 28.1 % 29.0 % (0.9 )%
Gross Profit and Gross Margin

The table below shows gross profit and gross margin by business and by segment for the nine months ended September 30, 2020 and 2019 (in millions):


	Gross Profit						Gross Margin
	2020		2019		Change		2020		2019		Change
Business
Commercial	$	685.9	$	738.7	-7.1	%	31.2	%	31.7	%	-0.5	%
Federal Government	126.8		101.8		24.6	%	17.1	%	18.0	%	-0.9	%
Consolidated	$	812.7	$	840.5	-3.3	%	27.6	%	29.0	%	-1.4	%

Contract
Commercial	$	606.9	$	630.9	-3.8	%	28.6	%	28.3	%	0.3	%
Federal Government	126.8		101.8		24.6	%	17.1	%	18.0	%	-0.9	%
	$	733.7	$	732.7	0.1	%	25.7	%	26.3	%	-0.6	%

Segment
Apex	$	528.1	$	555.4	-4.9	%	29.3	%	29.6	%	-0.3	%
Oxford	157.8		183.3		-13.9	%	39.8	%	40.3	%	-0.5	%
ECS	126.8		101.8		24.6	%	17.1	%	18.0	%	-0.9	%
Consolidated	$	812.7	$	840.5	-3.3	%	27.6	%	29.0	%	-1.4	%

____________


⁽¹⁾ Note: Contract gross profit and margin exclude permanent placement revenues.	~~Contract gross profit and margin excludes permanent placement.~~

Gross profit is comprised of revenues less costs of services, which consist primarily of compensation for our contract professionals, allowable materials and reimbursable out-of-pocket expenses. Consolidated gross profit was ~~$541.7 million,~~ down ~~1.3~~3.3 percent year over year resulting from the overall decline in revenues.

Gross margin was down year over year due to ~~the overall decline~~changes in ~~revenues. Gross margin was 28.1 percent, a compression of 90 basis points year over year primarily due to~~business mix stemming from the decline in permanent placement revenues ~~which are essentially 100 percent gross profit. Contract gross margin was 26.0 percent, down 20 basis points year over year, related to~~and the ~~higher mix~~high revenue growth of our federal government ~~IT solutions revenues,~~business, which ~~have~~carries lower gross margins than our commercial business. ~~The EBITDA~~Gross margin ~~for the~~on federal government ~~IT solutions business is slightly~~revenues was lower ~~than our consolidated margin.~~

Gross profit for the Apex Segment was down 2.2 percent on a 2.3 percent decrease in revenues. Gross margins for the segment held steady at 29.4 percent, despite an $8.4 million decrease in permanent placement revenues. The segment's contract gross margin was 28.2 percent, up 50 basis points year over year, reflecting lower travel and healthcare expenses and a higher bill/pay spread. Gross profit for the Oxford Segment was down 12.9 percent on an 11.2 percent decline in revenues. Gross margin for the segment was 39.3 percent, a decrease of 80 basis points year over year due to ~~a decrease in~~increased volume from certain programs under cost reimbursable contracts, which typically have lower margins than other contract types.

The contract gross margin for the commercial business, which excludes the effects of permanent placement revenues, ~~partially offset by a~~was up 30 basis ~~point expansion in contract gross margin. Gross profit for~~points year over year. This improvement reflected, among other things, the ~~ECS Segment was up 25.4 percent on revenue growth~~higher contribution of ~~26.2 percent. Gross margin for~~consulting revenues and lower billable consultant expenses, which are generally passed through to the ~~segment was 17.9 percent, nearly flat compared~~customer with ~~the prior year.~~no markup.

Selling, General and Administrative Expenses

SG&A expenses for the ~~first half of~~nine months ended September 30, 2020 were ~~$370.1~~$547.3 million ~~(19.2~~(18.6 percent of revenues), a year-over-year reduction of ~~$16.1~~$27.5 million and a 120 basis point reduction in SG&A expense as a percent of revenues. This improvement ~~in SG&A expenses was largely due~~related to effective expense management, as well as lower incentive compensation ~~(mainly for bonuses~~ and ~~commissions tied to the growth in revenues and Adjusted EBITDA),~~ travel ~~expenses; healthcare and stock-based compensation~~ expenses. ~~SG&A expenses in the first half of 2019 also included a $3.3 million charge related to the write-off of certain foreign trademarks.~~

Amortization of Intangible Assets

Amortization of intangible assets was ~~$24.7~~$37.6 million, down from ~~$26.9~~$38.8 million in the same period of 2019. The lower expense in the current year was due to ~~the~~ accelerated amortization ~~method~~ for certain acquired intangibles, which ~~have~~had higher amortization ~~rates~~ at the beginning of ~~their useful life.~~2019.

Interest Expense

Interest expense was ~~$21.1~~$30.4 million, ~~compared with $28.5 million in~~down 26.2 percent from the ~~same period~~prior year. This improvement was the result of ~~2019. This decrease was primarily due to~~(i) a ~~decrease~~reduction in LIBOR, ~~and~~(ii) a 25 basis point reduction in the spread on our ~~senior secured credit facility~~Credit Facility resulting from our capital restructuring in the fourth quarter of ~~2019.~~ 2019 and (iii) lower amortization of deferred loan costs.

Interest expense for the year was comprised of ~~$12.7~~$19.1 million of interest on the ~~senior notes, $7.6~~Senior Notes, $10.0 million of interest on the ~~4.625 percent senior secured credit facility~~Credit Facility and ~~$0.8~~$1.3 million ~~of amortization~~ of deferred loan ~~costs.~~fee amortization. The weighted-average borrowings outstanding were approximately $1.1 billion for the ~~first half of both~~nine months ended September 30, 2020 and ~~2019; and the~~2019. The weighted-average interest rate induring the ~~first half of 2020~~period was ~~3.8~~3.7 percent, down from ~~4.5~~4.4 percent in the same period of 2019.

Provision for Income Taxes

The provision for income taxes was ~~$33.2~~$52.5 million ~~in the first half of~~for nine months ended September 30, 2020, compared with ~~$29.5~~$50.2 million for the same period of last year. Our effective income tax rate for the nine months ended September 30, 2020 was 26.6 percent, which was slightly lower than for the same period of last year.

Net Income

Net income increased $9.5 million or 7.0 percent to $144.9 million in nine months ended September 30, 2020, from $135.4 million in the same period of 2019. ~~The effective tax rate in the first half of 2020 was 26.4 percent, compared with 27.5 percent in the same period of 2019.~~

~~Net Income~~

~~Net income increased $14.6 million or 18.7 percent to $92.6 million in the first half of 2020 from $78.0 million in the same period of 2019. The~~This increase ~~primarily~~ related to the ~~decrease~~moderate growth in revenues year over year and lower SG&A ~~expenses~~ and interest ~~expense.~~expenses.

ECS Segment Contract Backlog

Contract backlog is a useful measure of potential future revenues for our ECS Segment. Contract backlog represents the estimated amount of future revenues to be recognized under awarded contracts including task orders and options. Contract backlog does not include potential value from contract awards that have been protested by competitors until the protest is resolved in our favor. Contract backlog does not include any estimate of future work expected under indefinite delivery, indefinite quantity contracts or U.S. General Services Administration schedules. Contract backlog is segregated into funded contract backlog and negotiated unfunded contract backlog, which together make up total contract backlog.

Funded contract backlog for contracts with U.S. government agencies primarily represents contracts for which funding has been formally awarded less revenues previously recognized on these contracts and does not include the unfunded portion of contracts where funding is incrementally awarded or authorized by the U.S. government even though the contract may call for performance over a number of years. Funded contract backlog for contracts with non-government agencies represents the estimated value of contracts, which may cover multiple future years, less revenues previously recognized on these contracts.

Negotiated unfunded contract backlog represents the estimated future revenues to be earned from negotiated contract awards for which funding has not yet been awarded or authorized and from unexercised priced contract options.

Contract backlog estimates are subject to change and may be affected by the execution of new contracts, the extension or early termination of existing contracts, the non-renewal or completion of current contracts and adjustments to estimates for previously included contracts. Changes in the funded contract backlog are also affected by the funding cycles of the government.


(in millions)	September 30, 2020		December 31, 2019
Funded Contract Backlog	$	571.4	$	488.4
Negotiated Unfunded Contract Backlog	2,136.5		2,082.7
Contract Backlog	$	2,707.9	$	2,571.1

(in millions) June 30,
2020 December 31,
2019
Funded Contract Backlog $ 435.3
$ 488.4
Negotiated Unfunded Contract Backlog 2,178.0
2,082.7
Contract Backlog $ 2,613.3
$ 2,571.1

The book-to-bill ratio for our ECS ~~segment~~Segment was ~~0.7~~1.3 to 11.0 for the ~~second~~third quarter of 2020. ~~On a trailing-twelve-months' basis, the book-to-bill ratio was and 1.7 to 1.~~ The book-to-bill ratio was calculated as the sum of the change in total contract backlog during the period plus revenues for the period, divided by revenues for the period. The contract backlog coverage ratio (backlog at ~~June~~September 30, 2020 divided by trailing-twelve-months of ECS Segment's revenues) was ~~2.9 times.~~2.7 to 1.0.

Liquidity and Capital Resources

Our working capital at ~~June~~September 30, 2020 was ~~$497.3~~$545.3 million, and our cash and cash equivalents were ~~$207.9~~$229.7 million ~~of which $23.2~~(including $30.8 million ~~was~~ held in foreign ~~countries and not available to fund domestic operations unless repatriated. At June 30, 2020, we had full availability under our $250.0 million revolving credit facility.~~

countries). Our cash flows from operating activities, which benefit from our highly variable cost structure, have been our primary source of liquidity and have been sufficient to fund our working capital and capital expenditure needs. ~~While~~At September 30, 2020, we ~~are unable to predict the~~had full impact of COVID-19 on our operating cash flows, we expect to benefit from cash provided by a reduction in our working capital requirements and the deferral of federal payroll taxes as provided by the CARES Act. We also expect to continue to benefit from capital structure enhancements made in the fourth quarter of 2019 and our highly variable cost structure, both of which are discussed below.

In the fourth quarter of 2019, we improved our capital structure by issuing $550.0 million in unsecured senior notes due 2028 and amending our senior secured credit facility due 2025 to fix the interest rate on half of our indebtedness, lengthen our debt tenor by 2.3 years and increase our borrowing capacityavailability under our $250.0 million revolving credit ~~facility by $50.0 million to $250.0 million. There are no principal payments due on any of these borrowings until they reach maturity, the earliest of which is in April 2025.~~

Our highly variable cost structure provides further stability to our business. As assignment revenues decline, we see a commensurate decline in our costs of services. Our cash SG&A expenses are also variable, with one-third of these expenses comprised of incentive-based compensation tied directly to gross profit or other profitability metrics. As our revenues decline, we expect a similar reduction in working capital requirements.facility. We ~~also expect our future cash flow generation will benefit from the deferral of the employer-portion of the federal payroll tax as allowed by the recently enacted CARES Act.~~

~~Based on the factors described above, we~~ believe that our cash on hand, expected operating cash flows and availability under our revolving credit facility will be sufficient to ~~meet~~fulfill our obligations, working capital requirements and capital expenditures for the next 12 months.

Net cash provided by operating activities was ~~$250.2~~$337.8 million for the first ~~half~~nine months of 2020, compared with ~~$140.5~~$231.8 million in the same period of 2019. Net cash provided by operating activities before changes in operating assets and liabilities ~~of $156.0~~was $239.8 million, ~~was consistent~~compared with $247.4 million in the same period of 2019. Changes in operating assets and liabilities resulted in net cash generation of ~~$94.2~~$98.0 million for the first ~~half~~nine months of 2020, compared with net cash usage of ~~$15.9~~$15.6 million in the same period of 2019. ~~These year-over-year changes primarily related to~~The net cash generation in 2020 included the ~~decrease in accounts receivable on lower revenues due to COVID-19,~~ deferral of ~~$31.1 million in~~ federal payroll taxes as provided by the CARES ~~Act and timing of income tax payments.~~Act.

Net cash used in investing activities was ~~$108.4~~$180.1 million for the first ~~half~~nine months of 2020, compared with ~~$65.3~~$71.4 million for the same period of 2019. Net cash used in investing activities ~~for the first half of~~at September 30, 2020 ~~was primarily comprised of $85.5~~included $151.5 million for ~~the acquisition of Blackstone Federal~~acquisitions and $28.3 million in ~~the first quarter of 2020 and~~ capital ~~expenditures of $22.6 million, which included a major front and back office systems upgrade project.~~expenditures. This compares with cash used in investing activities in the same period of 2019, ~~comprised of~~which included $48.5 million for ~~the acquisition of DHA~~acquisitions and ~~$15.9~~$22.8 million ~~for~~in capital expenditures.

Net cash used in financing activities was ~~$29.2~~$24.4 million for the first ~~half~~nine months of 2020, compared with ~~$76.9~~$134.0 million in the same period of 2019. Net cash used in financing activities for the ~~first half of~~nine months ended September 30, 2020 consisted primarily of $27.9 million used for repurchases of our common stock. Net cash ~~provided by~~used in financing activities in the same period of 2019 consisted primarily of ~~$77.0~~$119.0 million in net payments of long-term ~~debt.~~debt and $20.0 million used for repurchases of our common stock.

Senior Secured Credit Facility

The senior secured credit facility ("Credit Facility") consists of a term B loan and a senior secured revolving credit facility with a maximum borrowing capacity of $250.0 million ~~(the "Revolver"~~("Revolver"). At ~~June~~September 30, 2020, the Company had no outstanding borrowings under the Revolver and had $3.9 million in undrawn stand-by letters of credit to secure certain obligations. Borrowings under the term B loan bear interest at LIBOR plus 1.75 percent, or the bank’s base rate plus 0.75 percent. Borrowings under the Revolver bear interest at LIBOR plus 1.25 to 2.25 percent, or the bank’s base rate plus 0.25 to 1.25 percent, depending on leverage levels. A commitment fee of 0.20 to 0.35 percent is payable on the undrawn portion of the Revolver. There are no required minimum payments on the Credit Facility and it is secured by substantially all of the Company's assets and includes various restrictive covenants.

Unsecured Senior Notes

Recent Accounting Pronouncements

See ~~“Note 2 -~~"Note 2. Accounting Standards ~~Update”~~Update" in the notes to the condensed consolidated financial statements in Part I, Item 1.

Critical Accounting Policies

There have been no significant changes to our critical accounting policies and estimates during the~~six~~nine months ended~~June~~ September 30, 2020 compared with those disclosed in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our2019 10-K and "“Note ~~1 - General”~~1. General" in the notes to the condensed consolidated financial statements in Part I, Item 1 included herein.

Commitments

We have not made any material changes to the significant commitments or contractual obligations that were disclosed in our 2019 10-K, nor have we entered into any new ones.

Item 3 -— Quantitative and Qualitative Disclosures about Market Risks

With respect to our quantitative and qualitative disclosures about foreign currency risks and interest rates risks, there have been no material changes to the information included in our 2019 10-K. Based on the relative size and nature of our foreign operations, we do not believe that a 10 percent change in the value of foreign currencies relative to the U.S. dollar would have a material impact on our condensed consolidated financial statements. A hypothetical 100 basis point change in interest rates for the Credit Facility would have resulted in an interest expense change of approximately $4.9 million on an annualized basis. The $550.0 million Senior Notes bear a fixed interest rate and thus are not susceptible to interest rate market risks.

Item 4 -— Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report. The term ~~“disclosure~~"disclosure controls and ~~procedures”~~procedures" means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods. We have established disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal controls over financial reporting that occurred during the three months ended ~~June~~September 30, 2020 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

PART II –— OTHER INFORMATION

Item 1 –— Legal Proceedings

We are involved in various legal proceedings, claims and litigation arising in the ordinary course of business. However, based on the facts currently available, we do not believe that the disposition of matters that are pending or asserted will have a material effect on our financial position, results of operations or cash flows.

Item 1A –— Risk Factors

There have been no material changes to the risk factors previously described in our 2019 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Item 2 -— Unregistered Sales of Securities and Use of Proceeds

None.

Item 3 -— Defaults Upon Senior Securities

None.

Item 4 -— Mine Safety Disclosures

Information concerning mine safety violations or other regulatory matters required by SEC regulations is included in Exhibit 95 filed with this Quarterly Report on Form 10-Q for the period ended June 30, 2020.

~~Item 5 - Other Information~~

None.

Item 5 — Other Information

None.

Item 6 -— Exhibits

INDEX TO EXHIBITS

Number

Footnote

Description

Number

Footnote

Description

3.1

~~(1)~~(3)

Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective June 23, 2014

3.1

(1)

Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective June 23, 2014

3.2

~~(2)~~(4)

Certificate of Amendment of Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective April 2, 2018

3.2

(2)

Certificate of Amendment of Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective April 2, 2018

3.3

~~(3)~~(P)

Third Amended and Restated Bylaws of ASGN Incorporated, effective April 2, 2018

3.3

~~(1)~~(3)

Third Amended and Restated Bylaws of ASGN Incorporated, effective April 2, 2018

4.1

(4)(P)

Specimen Common Stock Certificate

4.1

(4)(P)

Specimen Common Stock Certificate

31.1

Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a)

31.1

Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a)

31.2

Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a)

31.2

Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a)

32.1

Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350

32.1

Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350

32.2

Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350

32.2

Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350

Mine Safety Disclosures

101

The following material from this Quarterly Report on Form 10-Q of ASGN Incorporated for the period ended June 30, 2020, formatted in Inline XBRL Part I, Item 1 of this Form 10-Q formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income; (iii) Condensed Consolidated Statement of Stockholders’ Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.

101

The following material from this Quarterly Report on Form 10-Q of ASGN Incorporated for the period ended September 30, 2020, formatted in Inline XBRL Part I, Item 1 of this Form 10-Q formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income; (iii) Condensed Consolidated Statement of Stockholders’ Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.

104

Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101)

104

Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101)

(1)

Filed herewith.

(1)

Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on June 25, 2014.

(2)

Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on March 16, 2018.

(2)

Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on March 16, 2018.

(3)

Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on April 2, 2018.

(3)

Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on April 2, 2018.

(4)

Incorporated by reference from an exhibit to our Registration Statement on Form S-1 (File No. 33-50646) declared effective by the SEC on September 21, 1992.

(P)

This exhibit has been paper filed and is not subject to the hyperlinking requirements of Item 601 of Regulation S-K.

~~(2)~~(4)

Incorporated by reference from an exhibit to our Registration Statement on Form S-1 (File No. 33-50646) declared effective by the SEC on September 21, 1992.

~~(3)~~(P)

This exhibit has been paper filed and is not subject to the hyperlinking requirements of Item 601 of Regulation S-K.

SIGNATURE

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			ASGN Incorporated

November 6, 2020			~~ASGN Incorporated~~
By:
~~August 10, 2020~~	~~By:~~	/s/ Edward L. Pierce
				Edward L. Pierce
				Executive Vice President and Chief Financial Officer
				(Principal Financial and Accounting Officer and Duly Authorized Officer)



	June 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	207.9		$	95.2
Accounts receivable, net	612.1			648.7
Prepaid expenses and income taxes	15.9			29.4
Other current assets	18.7			18.2
Total current assets	854.6			791.5
Property and equipment, net	79.2			73.7
Operating lease right of use assets	90.3			94.6
Identifiable intangible assets, net	474.6			476.5
Goodwill	1,547.3			1,486.9
Other	19.5			18.2
Total assets	$	3,065.5		$	2,941.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	37.5		$	39.2
Accrued payroll and contract professional pay	206.5			203.2
Operating lease liabilities	27.6			25.8
Other current liabilities	85.7			72.7
Total current liabilities	357.3			340.9
Long-term debt	1,032.9			1,032.3
Operating lease liabilities	69.5			75.7
Deferred income tax liabilities	98.6			98.7
Payroll tax deferral and other	50.1			17.6
Total liabilities	1,608.4			1,565.2
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.01 par value; 1 million shares authorized; no shares issued	—			—
Common stock, $0.01 par value; 75 million shares authorized; 52.5 million and 52.9 million shares outstanding as of June 30, 2020 and December 31, 2019, respectively	0.5			0.5
Paid-in capital	645.9			638.0
Retained earnings	818.6			744.7
Accumulated other comprehensive loss	(7.9		)	(7.0		)
Total stockholders’ equity	1,457.1			1,376.2
Total liabilities and stockholders’ equity	$	3,065.5		$	2,941.4



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Revenues	$	936.8		$	972.3		$	1,927.3		$	1,896.0
Costs of services	676.0			687.1			1,385.6			1,346.9
Gross profit	260.8			285.2			541.7			549.1
Selling, general and administrative expenses	172.2			198.8			370.1			386.2
Amortization of intangible assets	12.6			13.1			24.7			26.9
Operating income	76.0			73.3			146.9			136.0
Interest expense	(9.7		)	(14.0		)	(21.1		)	(28.5		)
Income before income taxes	66.3			59.3			125.8			107.5
Provision for income taxes	17.5			16.2			33.2			29.5
Net income	$	48.8		$	43.1		$	92.6		$	78.0

Earnings per share:
Basic	$	0.93		$	0.82		$	1.76		$	1.48
Diluted	$	0.92		$	0.81		$	1.74		$	1.46

Number of shares and share equivalents used to calculate earnings per share:
Basic	52.5			52.8			52.7			52.7
Diluted	53.0			53.4			53.1			53.3

Reconciliation of net income to comprehensive income:
Net income	$	48.8		$	43.1		$	92.6		$	78.0
Foreign currency translation adjustment	1.6			1.0			(0.9		)	(0.1		)
Comprehensive income	$	50.4		$	44.1		$	91.7		$	77.9



Supplemental Disclosure of Cash Flow Information
Cash paid for:
Income taxes	$	5.3	$	21.0
Interest	$	19.7	$	25.4
Non-cash transactions:
Unpaid portion of additions to property and equipment	$	4.2	$	1.1
Operating lease right of use assets obtained in exchange for operating lease liabilities	$	10.4	$	7.6



		June 30, 2020						December 31, 2019
	Estimated Useful Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to amortization:
Customer and contractual relationships	2 - 12.75	$	403.6	$	200.4	$	203.2	$	384.9	$	179.9	$	205.0
Contractor relationships	2 - 5	71.1		70.7		0.4		71.1		70.6		0.5
Backlog	1 - 2.75	28.3		25.9		2.4		25.0		23.9		1.1
Non-compete agreements	2 - 7	25.6		15.9		9.7		24.8		13.8		11.0
In-use software	6	18.9		18.9		—		18.9		18.9		—
		547.5		331.8		215.7		524.7		307.1		217.6
Not subject to amortization:
Trademarks		258.9		—		258.9		258.9		—		258.9
Total		$	806.4	$	331.8	$	474.6	$	783.6	$	307.1	$	476.5



							% of Consolidated Revenues
	2020		2019		Chg.		2020		2019		Chg.
Revenues by Business
Commercial
Contract —
Assignment	$	580.0	$	650.6	(10.8	)%	61.9	%	67.0	%	(5.1	)%
Consulting	96.4		93.8		2.8	%	10.3	%	9.6	%	0.7	%
	676.4		744.4		(9.1	)%	72.2	%	76.6	%	(4.4	)%
Permanent placement	20.7		37.3		(44.8	)%	2.2	%	3.8	%	(1.6	)%
Total Commercial	697.1		781.7		(10.8	)%	74.4	%	80.4	%	(6.0	)%
Federal Government IT Solutions	239.7		190.6		25.8	%	25.6	%	19.6	%	6.0	%
Consolidated	$	936.8	$	972.3	(3.6	)%	100.0	%	100.0	%

Revenues by Segment
Apex	$	576.9	$	628.5	(8.2	)%	61.6	%	64.6	%	(3.0	)%
Oxford	120.2		153.2		(21.5	)%	12.8	%	15.8	%	(3.0	)%
ECS	239.7		190.6		25.8	%	25.6	%	19.6	%	6.0	%
Consolidated	$	936.8	$	972.3	(3.6	)%	100.0	%	100.0	%



							% Consolidated Revenues
	2020		2019		Chg.		2020		2019		Chg.
Revenues by Business
Commercial
Contract —
Assignment	$	1,221.2	$	1,288.0	(5.2	)%	63.4	%	67.9	%	(4.5	)%
Consulting	199.2		178.0		11.9	%	10.3	%	9.4	%	0.9	%
	1,420.4		1,466.0		(3.1	)%	73.7	%	77.3	%	(3.6	)%
Permanent placement	54.5		71.4		(23.7	)%	2.8	%	3.8	%	(1.0	)%
Total Commercial	1,474.9		1,537.4		(4.1	)%	76.5	%	81.1	%	(4.6	)%
Federal Government IT Solutions	452.4		358.6		26.2	%	23.5	%	18.9	%	4.6	%
Consolidated	$	1,927.3	$	1,896.0	1.7	%	100.0	%	100.0	%

Revenues by Segment
Apex	$	1,206.0	$	1,234.6	(2.3	)%	62.5	%	65.1	%	(2.6	)%
Oxford	268.9		302.8		(11.2	)%	14.0	%	16.0	%	(2.0	)%
ECS	452.4		358.6		26.2	%	23.5	%	18.9	%	4.6	%
Consolidated	$	1,927.3	$	1,896.0	1.7	%	100.0	%	100.0	%