ManpowerGroup 2009 Annual Report Download - page 21

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Management’s Discussion & Analysis Manpower 2009 Annual Report
Financial Measures – Constant Currency And Organic Constant Currency
Changes in our fi nancial results include the impact of changes in foreign currency exchange rates and acquisitions. We
provide “constant currency” and “organic constant currency” calculations in this report to remove the impact of these items. We
express year-over-year variances that are calculated in constant currency and organic constant currency as a percentage.
When we use the term “constant currency,” it means that we have translated fi nancial data for a period into U.S. Dollars using
the same foreign currency exchange rates that we used to translate fi nancial data for the previous period. We believe that this
calculation is a useful measure, indicating the actual growth of our operations. We use constant currency results in our
analysis of subsidiary or segment performance. We also use constant currency when analyzing our performance against that
of our competitors. Substantially all of our subsidiaries derive revenues and incur expenses within a single country and,
consequently, do not generally incur currency risks in connection with the conduct of their normal business operations.
Changes in foreign currency exchange rates primarily impact reported earnings and not our actual cash fl ow unless earnings
are repatriated.
When we use the term “organic constant currency,” it means that we have further removed the impact of acquisitions in the
current period from our constant currency calculation. We believe that this calculation is useful because it allows us to show
the actual growth of our pre-existing business.
Constant currency and organic constant currency percent variances, along with a reconciliation of these amounts to certain
of our reported results, are included on pages 27 and 28.
Results Of Operations – Years Ended December 31, 2009, 2008 and 2007
Given the current economic environment and the level of revenue declines that we have experienced in our staffi ng markets,
we have initiated a number of cost reduction measures to try to minimize the impact on our overall profi tability. Subsequent to
September 2008, we have reviewed our direct costs and selling and administrative expenses and reduced our full-time
equivalent employees by over 7,000 or 20% of our employee base and closed over 550 branches or 12% of our branches.
This includes the transition of a majority of Jefferson Wells professionals to 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 and
investing in our strategic initiatives against the desire to reduce costs and maintain profi tability. We are focused on making the
appropriate cost reductions, while trying to position ourselves to take advantage of any future economic recovery. We believe
this has allowed us to take market share because we have maintained our infrastructure at the appropriate level while
upgrading the skills of our sales team. We believe that maintaining our brand presence in key markets is critical to our ability
to rebound quickly when the economic conditions improve. However, if the economic downturn continues for an extended
period of time, or becomes more severe, we may decide to undertake further cost reductions, primarily consisting of
additional employee reductions and branch closures.
The effects of the economic downturn have impacted the demand for our services over the past several quarters. Based
upon historical experience, we would expect our businesses to return to growth when the underlying economies improve
and eventually to exceed previous revenue levels. The strength of this growth will be dependent on the level of economic
growth. Given the uncertainties of predicting economic trends, however, it is not possible to predict when we will return to
prior revenue and earnings levels.
Management’s Discussion and Analysis has been revised for the effects of the restatement discussed in Note 1 to the
Consolidated Financial Statements.