ManpowerGroup 2011 Annual Report Download - page 25

Management’s Discussion & Analysis ManpowerGroup 2011 Annual Report 23
The Americas, Southern Europe, Northern Europe and APME segments derive a significant majority of their revenues from
the placement of contingent workers. The remaining revenues within these segments are derived from other workforce
solutions and services, including 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. Due to the
nature of our business, we generally do not have export sales. We provide services to a wide variety of clients, none of
which individually comprises a significant portion of revenues for us as a whole or for any segment.
Financial Measures — Constant Currency And Organic Constant Currency
Changes in our financial 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 financial data for a period into U.S. dollars
using the same foreign currency exchange rates that we used to translate financial 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 flow
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 31 and 32.
Results Of Operations — Years Ended December 31, 2011, 2010 and 2009
In 2011, we saw solid growth in most of our markets, which allowed us to improve our operating leverage and our operating
results for 2011. These improvements built on those seen in 2010, where we were able to leverage our strong revenue
growth following the revenue declines seen during the economic downturn in 2009. The current year growth began
to moderate during the second quarter of 2011 due to the slowing of the global economy and more difficult prior year
comparable results and continued through the remainder of the year.
The improved operating leverage resulted from our being able to utilize excess capacity in the network to support revenue
growth without a similar increase in our expenses. This leverage was possible as we made strategic cost reductions during
the economic downturn, which reduced the adverse impact of the economy during the period, yet preserved capacity
within the network to handle the increased demand that we experienced during 2011. As expected, we also experienced a
decline in operating cash flows as our working capital needs increased with our revenue growth.
While we experienced growth in our businesses in 2011, the strength or duration of this growth will be dependent on the
health of the underlying economies where we operate. Given the uncertainties of predicting economic trends, it is not
possible to predict whether, or at what pace, we will grow from the current year record revenue levels or whether we will see
some slowing in 2012.
On September 22, 2011, we acquired approximately 70% of the shares and voting rights of Proservia SA (“Proservia”), a
provider of information technology and systems engineering solutions in France. We acquired the remaining shares and
voting rights by the end of November 2011. The purchase price was €14.89 per share. The total consideration, net of cash
acquired, was €21.6 million ($29.4 million). In 2011, we also had acquisitions in China and India that made up the majority of
the remaining $19.6 million of cash consideration paid for acquisitions in 2011.