ManpowerGroup 2009 Annual Report Download

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Table of contents

  • Page 1
    Manpower Inc. 2009 Annual Report

  • Page 2

  • Page 3
    ...our job is helping the world work, and today it's more important than ever before. Not only are we helping our clients and candidates get back to work, we're helping them work in a new way, unleashing the potential of the workforce and redefining how work gets done. Despite the challenging business...

  • Page 4
    ... employment services industry, differentiation is critical. The Manpower Experience is how we set ourselves apart and define our brand by delivering superior value to both clients and candidates. We believe this differentiation will create loyalty with both, ultimately driving more revenue and...

  • Page 5
    ...- and back-office systems that allow us to quickly match and deploy the right talent to our clients. Quick Facts: • MyPath™-our online career management experience-harnesses the power of social networking to help professionals actively manage their careers. Developing this close connection to...

  • Page 6
    ... better leverage our vast network in 82 countries and territories to support any client program-whether it's local, regional or global. Quick Facts: • Manpower Business Solutions is comprised of three main services: Task-Based Outsourcing (TBO), Recruitment Process Outsourcing (RPO) and Managed...

  • Page 7
    ...We are expanding our network of Professional Staffing offices to 400 worldwide. • The number of professionals with in-demand skills we place each day is approaching 25,000. 34 million The number of hours of talent delivered to clients last year through our Manpower Professional and Elan brands.

  • Page 8
    ... into jobs. In 2009, by comparison, we interviewed 11 million people and placed 3 million people into jobs. We felt first-hand what the world was experiencing. In a nutshell - it was a tough year. Accordingly, we experienced some of the most rapid drops in revenue in the history of our company...

  • Page 9
    ... need for talent will increase, and we provide the bridge to get the world back to work. Revenues from Services IN MILLIONS ($) 09 08 07 06 05 16,038.7 21,537.1 20,486.1 17,562.5 15,845.4 2009 was the most difficult year in the history of the company. Yet, at the same time, we have positioned...

  • Page 10
    ... and we are confident that we are well-positioned in the global market from a brand and capability perspective. We are at the inï¬,ection point. Now, we have a unique opportunity to leverage our expertise to help get the world back to work. 8 Manpower 2009 Annual Report Shareholder's Letter

  • Page 11
    ... only strengthen our Right Management brand, but reposition it closer to Manpower and invest in our Talent Management practice. It worked, as the number of coaching and assessment assignments in Right Management reached record levels. We have positioned ourselves well, as these services are in high...

  • Page 12
    ... on services that deliver value to our clients and candidates that address this ever-changing World of Work. We continue to grow our capabilities organically and, where appropriate, acquire companies that give us an acceleration and catalytic affect when using our capital, brand and geographic...

  • Page 13
    ... inject the Manpower Experience into the digital world. Over the past few years, we have been preparing to work in this space and do it in the right way. The introduction of MyPath, combined with core offerings like Direct Source, Direct Time, Direct Office and Direct Talent, enhances our position...

  • Page 14
    ... with our clients' business strategy, an area we know is highly sought after by many companies. Additionally, we will continue to develop and institutionalize our world-leading global offering for Manpower Business Solutions and our Recruitment Process Outsourcing service and explore virtual work to...

  • Page 15
    ... A. JOERRES CHAIRM AN, CEO & PRESIDENT FEBRUARY 19, 2010 Our strategy is clear. Over the next three years, we will leverage our strengths, global footprint and brand to aggressively expand our specialty staffing and new sectors and services. Shareholder's Letter Manpower 2009 Annual Report 13

  • Page 16
    .... Systemwide Offices represents our branch offices plus the offices operating under a franchise agreement with us. Strong Record of Long-Term Revenue Growth IN BILLIONS ($) 24 18 12 6 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 14 Manpower 2009 Annual Report Manpower at...

  • Page 17
    ... for further information.) (d) Amounts exclude the impact of the payroll tax modification in France, French competition investigation and reorganization charges. (See Note 1 to the Consolidated Financial Statements for further information.) Financial Highlights Manpower 2009 Annual Report 15

  • Page 18
    ... C ON SOLI D ATED STATEM EN TS OF SH AREH OLD ERS' EQU I TY N OTES TO C ON SOLI D ATED FI N AN C I AL STATEM EN TS SELEC TED FI N AN C I AL D ATA PERFORM AN C E GRAPH PRI N C I PLE OPERATI N G U N I TS C ORPORATE I N FORM ATI ON 16 Manpower 2009 Annual Report Management's Discussion & Analysis

  • Page 19
    ... Management brand helps clients attract and assess top talent; develop and grow leaders; and engage and align people with strategy. Professional Services - Our Jefferson Wells brand is a high-value alternative to public accounting firms and other consulting groups, delivering professional services...

  • Page 20
    ... other human resource services, including permanent employee recruitment, temporary and permanent employee testing, selection, and training and Manpower Business Solutions (MBS); MBS includes task outsourcing, vendor management, onsite human resource services and Recruitment Process Outsourcing (RPO...

  • Page 21
    ... project-based roles, where they are only compensated if utilized on client engagements as we try to improve our staff utilization in light of the revenue declines within this business. In reviewing our various cost control measures, we continue to balance the value of preserving our branch network...

  • Page 22
    ... the Company average, and margin expansion at Right Management resulting from the significant growth in the outplacement business; and a 7 basis point (+0.07%) increase due to the impact of currency exchange rates on the mix of our business. 20 Manpower 2009 Annual Report Management's Discussion...

  • Page 23
    ... in revenues, as we can only decrease expenses to a certain level without negatively impacting the long-term potential of our branch network and brands; offset by a 38 basis point (-0.38%) decrease due to the decrease in the goodwill impairment charge recorded in the third quarter of 2009 compared...

  • Page 24
    ...14 basis point (-0.14%) decrease due to a lesser amount of revenues coming from our specialty business where the gross profit margin is generally higher than the Company average, as these businesses grew relatively slower than the remainder of the business. 22 Manpower 2009 Annual Report Management...

  • Page 25
    ...million recorded in 2007 (see Note 14 to the Consolidated Financial Statements for further information); $37.2 million of global reorganization charges for severance and other office closure costs recorded in the fourth quarter; a 7.3% increase in expenses in constant currency, primarily related to...

  • Page 26
    ... condition and results of operations SEGM EN T R ESU LT S During the first quarter of 2009, our segment reporting was realigned due to a change in our management structure. Other Americas and Asia Pacific, previously reported in Other Operations, are now separate reportable segments. The United...

  • Page 27
    ... decreased 58.2% in constant currency in 2009, as this business has been impacted more than the staffing business. 09 08 07 1,728.0 1,841.6 1,613.2 Asia Pacific Operating Unit Profit IN MILLIONS ($) 09 08 07 26.5 29.2 41.4 Management's Discussion & Analysis Manpower 2009 Annual Report 25

  • Page 28
    ... fourth quarter of 2008, we transitioned a number of employees into project-based roles to reduce our fixed direct costs and improve our utilization of professional staff. Due to the continued decline in revenue levels in the second quarter of 2009, we made further changes to our business model and...

  • Page 29
    ...) Organic Constant Currency Variance Revenues from Services Americas: United States Other Americas France EMEA: Italy Other EMEA Asia Pacific Right Management Jefferson Wells Manpower Inc. Gross Profit - Manpower Inc. Operating Unit (Loss) Profit Americas: United States Other Americas France...

  • Page 30
    ... to the lower operating earnings. The increase in 2008 from 2007 was primarily due to the change in working capital, as accounts receivable declined significantly in the fourth quarter of 2008 as a result of a decrease in business volumes. 28 Manpower 2009 Annual Report Management's Discussion...

  • Page 31
    ... DSO (Days Sales Outstanding) offset by changes in foreign currency exchange rates. As business volumes decline, we receive payment on accounts receivable but do not add new accounts receivable at the same rate. In addition, our DSO for the fourth quarter of 2009 improved by seven days compared to...

  • Page 32
    ... interest rate and facility fees, of any replacement borrowings will be dependent upon the condition of the credit markets at that time. We currently do not anticipate any problems accessing the credit markets should we need to replace our facilities. 30 Manpower 2009 Annual Report Management...

  • Page 33
    .... As of December 31, 2008, there were borrowings of $64.0 million outstanding under this program at an interest rate of 2.4%, which were recorded as current maturities of long-term debt. These borrowings were repaid in March 2009. Management's Discussion & Analysis Manpower 2009 Annual Report 31

  • Page 34
    ... P LO Y M EN T- R ELAT ED I T EM S The employment of contingent workers and permanent staff throughout the world results in the recognition of liabilities related to defined benefit pension plans, self-insured workers' compensation, social program remittances and payroll tax audit exposures that...

  • Page 35
    ... our reserve level. During 2009 we experienced a reduction in workers' compensation expense, primarily as a result of our continued focus on safety, which includes training of contingent workers and client site reviews, and reduced volumes. Given our current claims experience and cost per claim, we...

  • Page 36
    ...nite-lived intangible assets at our unit of account level during the third quarter, or more frequently if events or circumstances change that would more likely than not reduce the fair value of our reporting units below their carrying value. 34 Manpower 2009 Annual Report Management's Discussion...

  • Page 37
    ...the reporting unit's fair value. Significant assumptions used in our annual goodwill impairment test during the third quarter of 2009 included: expected revenue growth rates, operating unit profit margins, and working capital levels; discount rates ranging from 10.7% to 22.2%; and a terminal value...

  • Page 38
    ..., and payments between certain countries for services provided. To reduce the currency risk related to these transactions, we may borrow funds in the relevant foreign currency under our revolving credit agreement or we may enter into a forward contract to hedge the transfer. As of December 31, 2009...

  • Page 39
    ... (1.0) (1.2) (28.4)(1) (43.3)(1) 1.0 1.2 (1) This change in fair value is not recorded in the Consolidated Financial Statements, however disclosure of the fair value is included in Note 1 to the Consolidated Financial Statements. Management's Discussion & Analysis Manpower 2009 Annual Report 37

  • Page 40
    ... acquirer's recognition and measurement of the assets acquired and the liabilities assumed in a business combination. We adopted the guidance effective January 1, 2009. There was no material impact of this adoption on our Consolidated Financial Statements. 38 Manpower 2009 Annual Report Management...

  • Page 41
    ... reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating...

  • Page 42
    ... of the Treadway Commission and our report dated February 19, 2010 expressed an unqualified opinion on the Company's internal control over financial reporting. Milwaukee, Wisconsin February 19, 2010 40 Manpower 2009 Annual Report Report of Independent Registered Public Accounting Firm

  • Page 43
    ... in Internal Control-Integrated Framework issued by the COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2009 of the Company and our report...

  • Page 44
    Consolidated Statements of Operations in millions, except per share data Year Ended December 31 2009 2008 2007 Revenues from services Cost of services Gross profit Selling and administrative expenses Goodwill and intangible asset impairment charges Selling and administrative expenses Operating...

  • Page 45
    ...718.7 744.0 530.6 213.4 6,622.2 $ $ Current Liabilities Accounts payable Employee compensation payable Accrued liabilities Accrued payroll taxes and insurance Value added taxes payable Short-term borrowings and current maturities of long-term debt Total current liabilities Other Liabilities Long...

  • Page 46
    ...charges Deferred income taxes Provision for doubtful accounts Loss from sale of an equity investment Share-based compensation Excess tax benefit on exercise of stock options Change in operating....5 50.5 248.5 $ $ $ $ $ $ $ $ $ 44 Manpower 2009 Annual Report Consolidated Statements of Cash Flows

  • Page 47
    ....4 106.6 15.5 17.5 (58.0) (3.6) $ 1.0 $ 2,544.2 $ 1,109.6 $ 106.9 $(1,225.2) (0.9) 14.6 17.5 (58.0) (3.6) $ 2,536.5 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. Consolidated Statements of Shareholders' Equity Manpower 2009 Annual Report 45

  • Page 48
    .... Our largest operations, based on revenues, are located in the U.S., France, Italy and the United Kingdom. We specialize in permanent, temporary and contract recruitment; employee assessment and selection; training; outsourcing; and outplacement and consulting services. We provide services to...

  • Page 49
    ... were $39.0, $21.5 and $20.8 for 2009, 2008 and 2007, respectively. The increase in write-offs during 2009 was due to an increase in customers not being able to pay because of the current decline in the economic environment. Notes to Consolidated Financial Statements Manpower 2009 Annual Report 47

  • Page 50
    ...apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We record a valuation allowance against deferred tax assets for which utilization of the asset is not likely. 48 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 51
    ..., Goodwill and tradename with a carrying amount of $1,307.2, were written down to their fair value of $1,144.1, resulting in an impairment charge of $163.1. These charges were included in earnings for the respective years. Notes to Consolidated Financial Statements Manpower 2009 Annual Report 49

  • Page 52
    ... cash ï¬,ow data. Therefore, it represents an indication of fair market value reï¬,ecting management's internal outlook for the reporting unit. The market approach utilizes the Guideline Public Company Method to quantify the 50 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 53
    ...the reporting unit's fair value. Significant assumptions used in our annual goodwill impairment test during the third quarter of 2009 included: expected revenue growth rates, operating unit profit margins, and working capital levels; discount rates ranging from 10.7% to 22.2%; and a terminal value...

  • Page 54
    ... of up to $182.1, remaining authorized for repurchase under this authorization as of December 31, 2009. Under the 2006 authorization, we repurchased 4.4 million shares of common stock during 2007 at a total cost of $325.0. 52 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 55
    ... to acquire COMSYS IT Partners, Inc. (NASDAQ: CITP), a leading professional staffing firm. The agreement has been approved by the boards of directors of both companies. Subject to the terms of the agreement, the value of the consideration for each outstanding share of COMSYS common stock would...

  • Page 56
    ..., in share-based compensation expense related to stock options, deferred stock, restricted stock, and the stock purchase plan (other than 2009), all of which is recorded in Selling and Administrative Expenses. The total income tax benefit recognized related to share-based compensation during 2009...

  • Page 57
    ... shares of common stock according to the terms and conditions under the 2003 Plan. As of December 31, 2009, 2008 and 2007, there were 17,288, 13,819 and 9,743 respectively, shares of deferred stock awarded under this arrangement, all of which are vested. Non-employee directors also receive an annual...

  • Page 58
    ... meet the threshold performance level. We have recognized a total compensation benefit of $1.5 for 2009 and total compensation expense of $1.2 and $5.8 in 2008 and 2007, respectively, related to the performance share units. 56 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 59
    ... stock options. We also maintain the Savings Related Share Option Scheme for United Kingdom employees with at least one year of service. The employees are offered the opportunity to obtain an option for a specified number of shares of common stock at not less than 85% of its market value on the day...

  • Page 60
    ... competition investigation in France Other, net Tax provision $ (8.0) 2.9 3.3 (37.2) 10.6 21.4 (1.8) (4.9) (13.7) $ 154.9 2.8 (3.7) 16.7 8.5 49.3 17.6 (9.0) 237.1 $ 271.9 4.8 (11.6) 1.1 25.0 - 4.8 7.3 303.3 $ $ $ 58 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 61
    ...rate expected to be in effect when the temporary differences reverse. Temporary differences, which gave rise to the deferred taxes are as follows: Year Ended December 31 2009 2008 Current Future Income Tax Benefits (Expense) Accrued payroll taxes and insurance Employee compensation payable Pension...

  • Page 62
    ... borrowings were repaid in March 2009. Fees associated with the amounts advanced were $0.4, $0.9 and $0.3 in 2009, 2008 and 2007, respectively, and were recorded as Other Expense in the Consolidated Statements of Operations. 60 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 63
    ... $408.4, of which $367.1 was unused. Due to limitations on subsidiary borrowings in our revolving credit agreement, additional subsidiary borrowings of $257.7 could be made under these facilities as of December 31, 2009. Notes to Consolidated Financial Statements Manpower 2009 Annual Report 61

  • Page 64
    ... To Consolidated Financial Statements in millions, except share and per share data A summary of Long-Term Debt is as follows: December 31 2009 2008 Euro-denominated notes: â,¬300 due June 2012 â,¬200 due June 2013 Revolving credit agreement: Euro-denominated borrowings Other: Accounts receivable...

  • Page 65
    ... $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Effective January 1, 2009, we terminated our defined benefit plan in Japan and replaced it with a defined contribution plan, resulting in a curtailment and settlement gain of $4.3. Notes to Consolidated Financial Statements Manpower 2009 Annual Report 63

  • Page 66
    ...used in the measurement of the benefit obligation are as follows: U.S. Plans Year Ended December 31 2009 2008 2009 Non-U.S. Plans 2008 Discount rate Rate of compensation increase 5.7% 4.0% 6.4% 4.0% 5.5% 4.5% 5.2% 4.1% 64 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 67
    ... guaranteed insurance contracts for two of our foreign plans. Peer data and historical returns are reviewed to check for reasonableness and appropriateness of our expected rate of return. Projected salary levels utilized in the determination of the projected benefit obligation for the pension plans...

  • Page 68
    ... change in the assumed health care cost trend rate would have the following effects: 1% Increase 1% Decrease Effect on total of service and interest cost components Effect on benefit obligation $ 0.2 3.5 $ (0.2) (3.0) 66 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 69
    ...N S AN D PAY M EN T S During 2010, we plan to contribute $22.5 to our pension plans and to fund our retiree health care payments as incurred. Projected benefit payments from the plans as of December 31, 2009 are estimated as follows: Year Pension Plans Retiree Health 2010 2011 2012 2013 2014 2015...

  • Page 70
    ... Other Comprehensive Income (Loss) as interest expense by recording $6.4 in the Consolidated Statement of Operations for the year ended December 31, 2009. We had no interest rate swap agreements as of December 31, 2009. 68 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 71
    ..., 2009 and 2008 are disclosed in Note 1 to the Consolidated Financial Statements. 14. Contingencies LI T I GAT I O N We are involved in a number of lawsuits arising in the ordinary course of business which will not, in the opinion of management, have a material effect on our results of operations...

  • Page 72
    ... other human resource services, including permanent employee recruitment, temporary and permanent employee testing, selection, and training and Manpower Business Solutions (MBS); MBS includes task outsourcing, vendor management, onsite human resource services and Recruitment Process Outsourcing (RPO...

  • Page 73
    ... franchise operations, which are discussed further on the financial highlights page. (c) Segment data presented has been revised for the effects of the restatement disclosed in Note 1 to the Consolidated Financial Statements. Notes to Consolidated Financial Statements Manpower 2009 Annual Report...

  • Page 74
    ... $ $ $ - - - (0.9) - 3.3 3.3 0.6 - - 3.0 $ (1.6) - (1.6) (0.9) - 3.0 3.0 0.4 - - 0.9 $ 0.8 - 0.8 (1.1) - 2.6 2.6 (0.1) - - 2.2 France EMEA: Italy Other EMEA Asia Pacific Right Management Jefferson Wells $ $ $ 72 Manpower 2009 Annual Report Notes to Consolidated Financial Statements

  • Page 75
    ... disclosed in Note 1 to the Consolidated Financial Statements. (b) Corporate assets include assets that are not used in the operations of any segment, the most significant of which are goodwill and purchased intangibles. Notes to Consolidated Financial Statements Manpower 2009 Annual Report 73

  • Page 76
    ... To Consolidated Financial Statements in millions, except share and per share data As Of And For The Year Ended December 31 2009 2008 2007 Long-Lived Assets Americas: United States Other Americas France EMEA: Italy Other EMEA Asia Pacific Right Management Jefferson Wells Corporate (a) $ 34...

  • Page 77
    ... quarter includes a $0.36 benefit for the business tax refund in France, an $0.11 benefit related to the modification to the payroll tax calculation in France and ($0.34) per diluted share for reorganization costs. **** Notes to Consolidated Financial Statements Manpower 2009 Annual Report...

  • Page 78
    ...the New York Stock Exchange in accordance with Section 303A.12 of the NYSE Listed Company Manual stating that, as of the date of the certification, he was not aware of any violation by Manpower of the NYSE's corporate governance listing standards. 76 Manpower 2009 Annual Report Selected Financial...

  • Page 79
    ...New Zealand, Nicaragua, Norway, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Puerto Rico, Qatar, Reunion, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates, United...

  • Page 80
    ...1 Audit Committee 2 Executive Compensation and Human Resources Committee 3 Nominating and Governance Committee * Denotes Committee Chair Senior Vice President Global Workforce Strategy E M M A VAN R O O Y E N Senior Vice President Chief Marketing Officer 78 Manpower 2009 Annual Report Corporate...

  • Page 81
    ... of the companies in the Commercial and Professional Services Group. The Corporate Governance Quotient index is issued by RiskMetrics Group Inc., a respected authority on proxy voting and corporate governance. Governance Metrics International, an independent corporate governance rating agency, rated...

  • Page 82
    Manpower Inc. World Headquarters 100 Manpower Place Milwaukee, WI 53212 USA www.manpower.com GC-29 © 2010 Manpower Inc.