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MAKING
INNOVATIVE
WORKFORCE
SOLUTIONS
HUMANLY
POSSIBLE
ManpowerGroupTM 2011 Annual Report

Table of contents

  • Page 1
    MAKING INNOVATIVE WORKFORCE SOLUTIONS HUMANLY POSSIBLE ManpowerGroup 2011 Annual Report TM

  • Page 2

  • Page 3
    ...the world. That's why only we were able to identify the dawn of the Human Age. We saw new complexities and challenges on the horizon, anticipating the increasingly sophisticated needs of our clients. And we evolved our organization to deliver on our vision to create innovative workforce solutions to...

  • Page 4
    MANPOWER Companies anticipate temporary/contract workers to be the largest growing percent of their workforce over the next 5 years. In the past, it was about preserving your business structure. Now and in the future, it's about having the most agile business structure and understanding the talent ...

  • Page 5
    ...other resource as demand for their products and services shifts and they look to create more agility in their business. Experis clients are seeking the world's hardest to find talent, evidenced in ManpowerGroup's 2011 Talent Shortage Survey which surveyed nearly 40,000 employers in 39 countries and...

  • Page 6

  • Page 7
    ... solutions include Strategic Workforce Consulting, the global leader in Recruitment Process Outsourcing, the world's largest vendor neutral Managed Services Provider, Borderless Talent Solutions, and Talent Based Outsourcing. RIGHT MANAGEMENT To effectively unleash passion and accelerate business...

  • Page 8
    ... in talent and career management workforce solutions. Through our innovative and proprietary process, we leverage our expertise to successfully increase productivity and optimize business performance. MANPOWERGROUPâ„¢ SOLUTIONS provides clients with human resources outsourcing services primarily...

  • Page 9

  • Page 10

  • Page 11
    ... in our history. 2011 was clearly a pivotal and transformative year for ManpowerGroup. We invented what it means to be an innovative workforce solutions company; we organized our family of brands to demonstrate our unique position to help our clients navigate the complexity of the Human Age and win...

  • Page 12
    ... Human Age, we have to anticipate our clients' needs. I clearly believe we are building strong and connected brands that offer our clients the service and solutions they can bank on as they make it through this high wire act chapter in the Human Age. 10 ManpowerGroup 2011 Annual Report Shareholder...

  • Page 13
    BUSINESS LINE GROSS PROFIT IN BILLIONS ($) MANPOWER $2.5 RIGHT MANAGEMENT $0.2 EXPERIS MANPOWERGROUP SOLUTIONS $0.7 $0.3 REVENUE IN BILLIONS ($) 24 18 12 6 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 0

  • Page 14
    ...-BASED AND RECITING SUPERFICIAL SPIN FOR SHORT-TERM PROFITABILITY. RATHER, IT COMES FROM BEING PRINCIPLE-BASED AND EMPOWERING OUR PEOPLE TO BE GREAT BRAND AMBASSADORS COMMITTED TO THE COMPANY'S LONG-TERM SUSTAINABILITY AND PROFITABILITY." JEFFREY A. JOERRES CHAIRMAN, CEO AND PRESIDENT MANPOWERGROUP

  • Page 15
    ... much sense for companies to hire full time people for work of this nature. This is why we invested in our global go-to-market strategy for our professional resourcing and project-based solutions brand Experis. Our selective acquisition of WDC in India and full integration of COMSYS, Jefferson Wells...

  • Page 16
    ... Workforce Consulting offering, we are helping clients develop a robust workforce strategy that aligns priorities around talent needed and accounts for external and internal demographic forces in the Human Age, ensuring the execution of their business strategy. 14 ManpowerGroup 2011 Annual Report...

  • Page 17
    ... their careers and help organizations manage their talent. From the executive management level to the factory worker level and everything in between, we are experiencing and anticipating growth, and seeing opportunity in all parts of our business, around the world. Our emerging markets, from China...

  • Page 18
    ... did it exemplifies the ManpowerGroup Experience. They have made us all proud and our collective hat goes off to them. It is with that great pride, admiration and appreciation that we honored the ManpowerGroup Japan leadership team with the 2011 ManpowerGroup Power Award, which I presented to them...

  • Page 19
    I want to take this time to thank our colleagues around the world for what they do every day to break ManpowerGroup out from the pack and make innovative workforce solutions humanly possible. I want to thank our board for their continued dedication and support of our strategy, our management and our...

  • Page 20
    ... provide innovative workforce solutions and services to clients in all industry segments. Systemwide Offices represents our branch offices plus the offices operating under a franchise agreement with us. 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 0 05 10 18 ManpowerGroup 2011 Annual Report At...

  • Page 21
    ...$968.0 million and $1,075.2 million for 2007, 2008, 2009, 2010 and 2011, respectively. In the United States, where the majority of our franchises operate, Revenues from Services includes fees received from the related franchise operations of $24.2 million, $17.7 million, $10.5 million, $13.7 million...

  • Page 22
    ... 48 Consolidated Statements of Cash Flows 49 Consolidated Statements of Shareholders' Equity 50 Notes to Consolidated Financial Statements 80 Selected Financial Data 80 Performance Graph 81 Principal Operating Units 82 Corporate Information 20 ManpowerGroup 2011 Annual Report Table of Contents

  • Page 23
    ... (TBO), Managed Services Provider (MSP), Recruitment Process Outsourcing (RPO), Borderless Talent Solutions (BTS) and Strategic Workforce Consulting (SWC). We are the largest provider of MSP and RPO services in the world. Management's Discussion & Analysis ManpowerGroup 2011 Annual Report 21

  • Page 24
    ... branch network and brands. The nature of our operations is such that our most significant current asset is accounts receivable, with an average days sales outstanding of approximately 60 days based on the markets where we do business. Our most significant current liabilities are payroll related...

  • Page 25
    ... recruitment and assessment, training and development, and ManpowerGroup Solutions. ManpowerGroup Solutions includes TBO, MSP, RPO, BTS and SWC. Right Management's revenues are derived from career management and workforce consulting services. Segment revenues represent sales to external clients...

  • Page 26
    ... payroll tax subsidies; and • a 10 basis point (-0.10%) decline due to our acquisitions in APME; partially offset by • a 10 basis point (0.10%) favorable impact due to the growth in our permanent recruitment business. 24 ManpowerGroup 2011 Annual Report Management's Discussion & Analysis

  • Page 27
    ... in the fourth quarter of 2010 related to Right Management and Jefferson Wells as compared to no impairment charge recorded in 2011; partially offset by • an increase in our organic salary-related costs due to salary increases, and an increase in headcount in certain markets in response to the...

  • Page 28
    ... • the addition of COMSYS's recurring selling and administrative costs subsequent to April 5, 2010 as well as $10.8 million of transaction costs and $20.8 million of amortization expense as a result of the acquisition; and 26 ManpowerGroup 2011 Annual Report Management's Discussion & Analysis

  • Page 29
    ... headquarters operating costs. This profit measure does not include goodwill and intangible asset impairment charges or amortization of intangible assets related to acquisitions, interest and other income and expense amounts or income taxes. Management's Discussion & Analysis ManpowerGroup 2011...

  • Page 30
    ...2009 while Other Southern Europe increased 18.3% (20.2% in constant currency). These revenue improvements were generated in both our staffing/interim business and our permanent recruitment business. 11 10 09 170.1 101.8 42.6 28 ManpowerGroup 2011 Annual Report Management's Discussion & Analysis

  • Page 31
    ... Northern Europe was 3.5%, 2.8% and 0.9% in 2011, 2010 and 2009, respectively. The increase in both 2011 and 2010 was the result of gaining operating leverage to support higher revenue levels without a similar increase in expenses. Management's Discussion & Analysis ManpowerGroup 2011 Annual Report...

  • Page 32
    ... career management workforce solutions operating in over 170 offices in more than 50 countries and territories. In 2011, Revenues from services decreased 13.6%, or 16.6% in constant currency. This decrease was due primarily to the decline in the demand for the counter-cyclical outplacement services...

  • Page 33
    ... Impact of Acquisitions (In Constant Currency) Organic Constant Currency Variance Revenues from Services Americas: United States Other Americas Southern Europe: France Italy Other Southern Europe Northern Europe APME Right Management ManpowerGroup Gross Profit - ManpowerGroup Operating Unit Pro...

  • Page 34
    ....4 million in 2010 as compared to providing cash of $239.4 million in 2009. This cash usage in 2011 was primarily due to the increase in accounts receivable as a result of the growth in our business and timing of tax payments. 32 ManpowerGroup 2011 Annual Report Management's Discussion & Analysis

  • Page 35
    ... 2011, 2010 and 2009, the Board of Directors declared total cash dividends of $0.80, $0.74, and $0.74 per share, respectively, resulting in total dividend payments of $65.1 million, $60.8 million and $58.0 million, respectively. Management's Discussion & Analysis ManpowerGroup 2011 Annual Report...

  • Page 36
    ... terms, including 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. 34 ManpowerGroup 2011 Annual...

  • Page 37
    ... historical write-off experience, the current aging of receivables and a specific review for potential bad debts. Items that affect this balance mainly include bad debt expense and write-offs of Accounts receivable balances. Management's Discussion & Analysis ManpowerGroup 2011 Annual Report 35

  • Page 38
    ... 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 require us to make estimates and assumptions in determining the proper reserve...

  • Page 39
    ...this occur in 2011, we could potentially experience higher costs for a 1 to 2 year period starting in 2012. Social Program Remittances and Payroll Tax Audit Exposure On a routine basis, various governmental agencies in some of the countries in which we operate audit our payroll tax calculations and...

  • Page 40
    ... revenue growth rates and operating unit profit margins, our assessment of future market potential, and our expectations of future business performance. The table below provides a sample of our reporting units' estimated fair values and carrying values, which were determined as part of our annual...

  • Page 41
    ... revenue declines during 2009 and 2008. The discount rate was also impacted unfavorably by a 1% increase to our equity risk premium as a result of the market conditions and economic uncertainty at that time. Under the current accounting guidance, we are also required to test our indefinite-lived...

  • Page 42
    ... 2010. Interest Rates - Our exposure to market risk for changes in interest rates relates primarily to our variable rate long-term debt obligations. We have historically managed interest rates through the use of a combination of fixed- and variable-rate borrowings and interest rate swap agreements...

  • Page 43
    ... workers may be used. Changes in applicable laws or regulations have occurred in the past and are expected in the future to affect the extent to which workforce solutions and services firms may operate. These changes could impose additional costs, taxes, record keeping or reporting requirements...

  • Page 44
    ... bill rates, however, we experienced an unfavorable impact on margins from this additional costs in 2011 due to the timing of some price increases. In July 2011, the French Social Security Act FY11 was passed by the French government, which requires French companies to pay a bonus to all employees...

  • Page 45
    ...testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on our evaluation we have concluded that our internal control over financial reporting was effective as of December 31, 2011. February 23, 2012 Management's Discussion & Analysis ManpowerGroup 2011 Annual...

  • Page 46
    ... Accounting Firm To The Board Of Directors And Shareholders Of ManpowerGroup We have audited the accompanying consolidated balance sheets of Manpower Inc. (d/b/a ManpowerGroup) and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements of operations...

  • Page 47
    ... Public Accounting Firm To The Board Of Directors And Shareholders Of ManpowerGroup We have audited the internal control over financial reporting of Manpower Inc. (d/b/a ManpowerGroup) and subsidiaries (the "Company") as of December 31, 2011, based on criteria established in Internal Control...

  • Page 48
    CONSOLIDATED STATEMENTS OF OPERATIONS in millions, except per share data Ye ar Ended De cember 31 2011 2010 2009 Revenues from services Cost of services Gross profit Selling and administrative expenses, excluding impairment charges Goodwill and intangible asset impairment charges Selling and ...

  • Page 49
    ....8 518.5 170.3 $ 6,899.7 $ 6,729.7 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 50
    ... asset impairment charges Deferred income taxes Provision for doubtful accounts Loss from sale of an equity investment Share-based compensation Excess tax benefit on exercise of share-based awards Change in operating assets and liabilities, excluding the impact of acquisitions: Accounts receivable...

  • Page 51
    ... of tax Defined benefit pension plans and retiree health care plan, net of tax Total comprehensive loss Issuances under equity plans, including tax benefits 699,244 Issuance for business acquisition 3,197,396 Share-based compensation expense Dividends ($0.74 per share) Repurchases of common stock...

  • Page 52
    ... 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 and assessment; training and development; outsourcing; career management and workforce consulting services. We provide services to...

  • Page 53
    We record revenues from sales of services and the related direct costs in accordance with the accounting guidance on reporting revenue gross as a principal versus net as an agent. In situations where we act as a principal in the transaction, we report gross revenues and cost of services. When we act...

  • Page 54
    ...- - We determine the fair value of our available-for-sale securities and deferred compensation plan assets, comprised of publicly traded securities, by using market quotes as of the last day of the period. The fair value of the interest rate swaps and foreign currency forward contracts are measured...

  • Page 55
    ... unit profit margins were determined after considering our historical revenue growth rates and operating unit profit margins, our assessment of future market potential, and our expectations of future business performance. Notes to Consolidated Financial Statements ManpowerGroup 2011 Annual Report...

  • Page 56
    ... impairment charge of $117.2 ($72.7 after-tax) for the tradenames associated with these two reporting units. For Right Management, our anticipated revenues and income as of the fourth quarter of 2010 decreased to a level which required us to adjust the size premium included in our discount rate. In...

  • Page 57
    ...lives: buildings - up to 40 years; furniture and equipment - 2 to 16 years; leasehold improvements - lesser of life of asset or expected lease term. Expenditures for renewals and betterments are capitalized whereas expenditures for repairs and maintenance are charged to income as incurred. Upon sale...

  • Page 58
    ... goodwill impairment test for reporting units with zero or negative carrying amounts. We adopted this guidance effective January 1, 2011. There was no impact of this adoption on our Consolidated Financial Statements. In December 2010, the FASB issued new accounting guidance on business combinations...

  • Page 59
    ... revenue growth rates, operating unit profit margins, capital charges representing 1.3% of revenues, and a 13% discount rate. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date of April 5, 2010: Cash and cash equivalents Accounts...

  • Page 60
    ... Consolidated Statements of Operations. From time to time, we acquire and invest in companies throughout the world, including franchises. Excluding Proservia and COMSYS, the total cash consideration paid for acquisitions, net of cash acquired, for the years ended December 31, 2011, 2010 and 2009 was...

  • Page 61
    ... assumptions: Year Ended December 31 2011 2010 2009 Average risk-free interest rate Expected dividend yield Expected volatility Expected term (years) 2.6% 1.1% 41.0% 5.9 2.6% 1.4% 41.0% 5.4 1.8% 2.5% 42.0% 5.5 Notes to Consolidated Financial Statements ManpowerGroup 2011 Annual Report 59

  • Page 62
    ...part or all of their annual cash retainer otherwise payable to them. The number of shares of deferred stock is determined pursuant to a formula set forth in the terms and conditions adopted under the 2003 Plan and subsequently under the 2011 Plan and the deferred stock is settled in shares of common...

  • Page 63
    ...in 2011 and 2010, respectively, and a total compensation benefit of $1.5 for 2009 related to the performance share units. OTHER STOCK PLANS Under the 1990 Employee Stock Purchase Plan, designated employees meeting certain service requirements may purchase shares of our common stock through payroll...

  • Page 64
    ...follows: 2011 2010 2009 Shares (in thousands) Exercise price ranges Weighted-average remaining life 3,074 $52-$93 6.3 years 6,583 $11-$93 5.8 years 6,231 $9-$93 6.2 years 05. Income Taxes The Provision for income taxes was as follows: Year Ended December 31 2011 2010 2009 Current United States...

  • Page 65
    ... tax rate expected to be in effect when the temporary differences reverse. Temporary differences, which gave rise to the deferred taxes, were as follows: Year Ended December 31 2011 2010 Current Future Income Tax Benefits (E xpense) Accrued payroll taxes and insurance Employee compensation payable...

  • Page 66
    ... As of December 31, 2011 and 2010, we have recorded a deferred tax liability of $22.0 and $23.6, respectively, related to non-U.S. earnings that we plan to remit. As of December 31, 2011, we have gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties...

  • Page 67
    ... 2010 goodwill impairment charge for Right Management impacted both Corporate ($184.5) and Right Management ($94.4). (4) The majority of the Corporate balance as of December 31, 2011 relates to goodwill attributable to our acquisition of Jefferson Wells ($55.5) which is now part of the United States...

  • Page 68
    ...2011. As of December 31, 2010, we had letters of credit totaling $2.2 issued under our previous $400.0 million revolving credit agreement. Under the Agreement, a credit ratings-based pricing grid determines the facility fee and the credit spread that we add to the applicable interbank borrowing rate...

  • Page 69
    ...other comprehensive income, net of tax, consist of: U.S. Plans December 31 2011 2010 2011 Non-U.S. Plans 2010 Net loss Prior service cost Total $ $ 12.8 0.2 13.0 $ $ 9.3 0.2 9.5 $ $ 7.0 6.5 13.5 $ $ 2.4 7.2 9.6 Notes to Consolidated Financial Statements ManpowerGroup 2011 Annual Report 67

  • Page 70
    ... the measurement of the benefit obligation were as follows: U.S. Plans Year Ended December 31 2011 2010 2011 Non-U.S. Plans 2010 Discount rate Rate of compensation increase 4.6% 3.0% 5.1% 4.0% 4.7% 4.0% 5.1% 4.3% 68 ManpowerGroup 2011 Annual Report Notes to Consolidated Financial Statements

  • Page 71
    ... rate of return. Projected salary levels utilized in the determination of the projected benefit obligation for the pension plans are based upon historical experience and the future expectations for each respective country. Our plans' investment policies are to optimize the long-term return on plan...

  • Page 72
    ... Inputs (Level 3) Asset Category Cash and cash equivalents(1) Equity securities: U.S. companies International companies Fixed income securities: Government bonds(2) Corporate bonds Guaranteed insurance contracts Other types of investments: Unitized funds (3) Equity hedge funds Real estate funds...

  • Page 73
    ... AND PAYMENTS During 2012, we plan to contribute $20.0 to our pension plans and to fund our retiree health care payments as incurred. Projected benefit payments from the plans as of December 31, 2011 were estimated as follows: Year Pension Plans Ret iree Health Care P lan 2012 2013 2014 2015 2016...

  • Page 74
    ...per share data 09. Accumulated Other Comprehensive Income The components of Accumulated other comprehensive income, net of tax, were as follows: December 31 2011 2010 20 09 Foreign currency translation Unrealized gain on investments Defined benefit pension plans (Note 8) Retiree health care plan...

  • Page 75
    ... in interest rates relates primarily to our Long-term debt obligations. We manage interest rate risk through the use of a combination of fixed and variable rate borrowings. In the past, we have also used interest rate swap agreements, however, we haven't had any such agreements in 2011 or 2010. In...

  • Page 76
    ... Process Outsourcing (RPO), Borderless Talent Solutions (BTS) and Strategic Workforce Consulting (SWC). The Right Management segment revenues are derived from career management and workforce consulting services. Segment revenues represent sales to external clients. Due to the nature of our business...

  • Page 77
    ... rather than in Cost of services, in accordance with the current accounting guidance on income taxes. However, we view this tax as operational in nature. Accordingly, the financial information reviewed internally continues to include the French business tax within the Operating unit profit of our...

  • Page 78
    ... - - - (0.9) - - (0.9) 3.3 0.6 - $ 4.6 $ 3.0 (a) Intangible asset amortization related to acquisitions was excluded from operating costs within the reportable segments and corporate expenses, and shown separately. 76 ManpowerGroup 2011 Annual Report Notes to Consolidated Financial Statements

  • Page 79
    ...70.5 0.7 - $ - - - 1.1 - - 1.1 64.0 0.4 - $ 71.6 $ 65.5 (a) Corporate assets include assets that were not used in the operations of any segment, the most significant of which were purchased intangibles and cash. Notes to Consolidated Financial Statements ManpowerGroup 2011 Annual Report 77

  • Page 80
    ... FINANCIAL STATEMENTS in millions, except share and per share data Year Ended Decem ber 31 2011 2010 2009 Long-Lived Assets(a) Americas: United States Other Americas Southern Europe: France Italy Other Southern Europe Northern Europe APME Right Management Corporate $ 35.5 10.5 46.0 46...

  • Page 81
    ...Year Ended December 31, 2011 Revenues from services Gross profit Operating profit(a) Net earnings Net earnings per share - basic Net earnings per share - diluted(b) Dividends per share Market price: High Low Year Ended December 31, 2010 Revenues from services Gross profit Operating profit (loss...

  • Page 82
    ...400 MIDCAP STOCK INDEX $100 S&P SUPERCOMPOSITE HUMAN RESOURCES AND EMPLOYMENT SERVICES INDEX $80 $60 $40 2006 2007 2008 2009 2010 2011 December 31 2011 2010 2009 2008 2007 2006 ManpowerGroup S&P 400 Midcap Stock Index S&P Supercomposite Human Resources and Employment Services Index $ 48...

  • Page 83
    ... that help clients win in the Human Age. These solutions cover an entire range of talent-driven needs from recruitment and assessment, training and development, and career management, to outsourcing and workforce consulting. ManpowerGroup maintains the world's largest and industry-leading network of...

  • Page 84
    ... Donnelley & Sons EDWARD J. ZORE1*,3 Retired President and CEO Northwestern Mutual BOARD COMMITTEES 1 Audit Committee 2 Executive Compensation and Human Resources Committee 3 Nominating and Governance Committee * Denotes Committee Chair 82 ManpowerGroup 2011 Annual Report Corporate Information

  • Page 85
    .../isd STOCK EXCHANGE LISTING May 2, 2012 at 10 a.m. ManpowerGroup World Headquarters 100 Manpower Place Milwaukee, WI 53212 USA INVESTOR RELATIONS WEBSITE NYSE Symbol: MAN FORM 10-K The most current corporate and investor information can be found on the ManpowerGroup corporate Web site at...

  • Page 86
    www.manpowergroup.com ManpowerGroup 100 Manpower Place Milwaukee Wisconsin, 53212