ManpowerGroup 2009 Annual Report Download - page 49

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Notes to Consolidated Financial Statements Manpower 2009 Annual Report
During the fourth quarter of 2009, we determined that one of our subsidiaries within the Other EMEA segment prematurely
recognized revenues related to a workforce solutions contract. These revenues were recorded on a cash-basis rather than
being deferred and recognized over the performance period. Accordingly, we have restated our accompanying consolidated
statements of operations for 2008 and 2007 and the fi rst three quarters of 2009 to defer certain amounts of revenue to future
periods, net of income taxes. This restatement had no impact on cash fl ows under the contract and only affects the timing of
when revenues are earned. Total revenues under this contract are expected to remain unchanged.
The effects of this restatement on 2008 and 2007, respectively, are as follows:
Year Ended December 31, 2008
As previously
reported Adjustment As restated
Revenues from services $ 21,552.8 $ (15.7) $ 21,537.1
Cost of services 17,450.2 – 17,450.2
Gross profi t 4,102.6 (15.7) 4,086.9
Selling and administrative expenses 3,430.3 – 3,430.3
Goodwill and intangible asset impairment charges 163.1 – 163.1
Selling and administrative expenses 3,593.4 – 3,593.4
Operating profi t 509.2 (15.7) 493.5
Interest and other expenses 50.9 – 50.9
Earnings before income taxes 458.3 (15.7) 442.6
Provision for income taxes 239.4 (2.3 ) 237.1
Net earnings $ 218.9 $ (13.4) $ 205.5
Net earnings per share - basic $ 2.78 $ (0.17) $ 2.61
Net earnings per share - diluted $ 2.75 $ (0.17) $ 2.58
Year Ended December 31, 2007
As previously
reported Adjustment As restated
Revenues from services $ 20,500.3 $ (14.2) $ 20,486.1
Cost of services 16,651.7 – 16,651.7
Gross profi t 3,848.6 (14.2) 3,834.4
Selling and administrative expenses 3,023.2 – 3,023.2
Operating profi t 825.4 (14.2) 811.2
Interest and other expenses 34.2 – 34.2
Earnings before income taxes 791.2 (14.2) 777.0
Provision for income taxes 306.5 (3.2 ) 303.3
Net earnings $ 484.7 $ (11.0) $ 473.7
Net earnings per share - basic $ 5.83 $ (0.13) $ 5.70
Net earnings per share - diluted $ 5.73 $ (0.13) $ 5.60
This restatement also impacted the consolidated balance sheet as of December 31, 2008 by increasing Accrued Liabilities,
Other Long-Term Liabilities and Other Assets by $7.8, $27.5 and $4.0, respectively, and decreasing Accounts Payable and
Retained Earnings by $6.9 and $24.4, respectively, related to the recording of deferred revenue and the tax impact of the
restatement. Beginning Retained Earnings as of January 1, 2008 decreased by $11.0. Certain components within cash
fl ows from operating activities have also been revised; however, net cash provided by operating activities for 2008 and 2007
remain unchanged. See Note 16 to the Consolidated Financial Statements for the impact of the restatement to our quarterly
2009 operating results.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
We have an Allowance for Doubtful Accounts recorded as an estimate of the Accounts Receivable balance that may not be
collected. This allowance is calculated on an entity-by-entity basis with consideration for historical write-off experience, the
current aging of receivables and a specifi c review for potential bad debts. Items that affect this balance mainly include bad
debt expense and the write-off of accounts receivable balances.
Bad debt expense is recorded as Selling and Administrative Expenses in our Consolidated Statements of Operations and
was $27.8, $23.4 and $21.8 in 2009, 2008 and 2007, respectively. Factors that would cause this provision to increase
primarily relate to increased bankruptcies by our clients and other diffi culties collecting amounts billed. On the other hand, an
improved write-off experience and aging of receivables would result in a decrease to the provision. Write-offs 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.