ManpowerGroup 2011 Annual Report Download - page 28

26 ManpowerGroup 2011 Annual Report Management’s Discussion & Analysis
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of oper ations
CONSOLIDATED RESULTS—2010 COMPARED TO 2009
The following table presents selected consolidated financial data for 2010 as compared to 2009.
(in millions, except per share data) 2009
Reported
Variance
Variance in
Constant
Currency
Variance in
Organic
Constant
Currency
2010
Revenues from services $ 18,866.5 $ 16,038.7 17.6% 19.2% 15.5%
Cost of services 15,621.1 13,220.5 18.2
Gross profit 3,245.4 2,818.2 15.2 16.4 11.1
Gross Profit Margin 17.2% 17.6%
Selling and administrative expenses,
excluding impairment charges 2,938.6 2,715.5
Goodwill and intangible asset impairment charges 428.8 61.0
Selling and administrative expenses 3,367.4 2,776.5 21.3 22.1 16.9
Selling and administrative expenses as a % of revenues 17.8% 17.3%
Operating (loss) profit (122.0) 41.7 (392.6) (366.9) (377.2)
Operating Profit Margin (0.6)% 0.3%
Net Interest expense 37.5 50.0 (25.0)
Other expenses 5.7 14.6 (61.0)
Loss before income taxes (165.2) (22.9)
Provision for income taxes 98.4 (13.7)
Effective income tax rate 59.5% (59.9)%
Net loss $ (263.6) $ (9.2)
Net loss per share — diluted $ (3.26) $ (0.12)
Weighted average shares — diluted 81.0 78.3 3.4%
The year-over-year increase in Revenues from services is primarily attributable to:
• increased demand for services in most of our markets, including the Americas, Southern Europe, Northern Europe, and
APME, where revenues increased 44.8%, 17.9%, 13.9% and 14.5%, respectively, on a constant currency basis. Included
in the Americas’ results for 2010 were revenues of $582.7 million associated with our acquisition of COMSYS. Excluding
COMSYS and other acquisitions, the Americas’ revenues and our consolidated revenues increased 23.1% and 15.5%,
respectively, on an organic constant currency basis; offset by
• decreased demand for Right Management’s services where revenues decreased 33.8% on a constant currency basis; and
• a 1.6% decrease due to the impact of currency exchange rates.
The overall 40 basis point (-0.40%) decrease in Gross profit margin is attributed to:
• a 101 basis point (-1.01%) decline resulting from our outplacement revenue decline at Right Management, where the
gross profit margin is higher than our Company average; and
• a 30 basis point (-0.30%) decline in our organic staffing/interim business, because of pricing pressures in most of our
markets during the latter part of 2009 and the beginning of 2010 due to the economic environment; partially offset by
• a 36 basis point (0.36%) impact due to a change in French law resulting in a reclassification of the French business tax
from Cost of services to the Provision for income taxes, effective January 1, 2010;
• a 26 basis point (0.26%) impact due to an increase in our interim and permanent recruitment gross margins resulting
from the acquisition of COMSYS;
• a 15 basis point (0.15%) impact due to an increase in the permanent recruitment business; and
• a 14 basis point (0.14%) impact due to a change in the mix of our services.
The 21.3% increase in Selling and administrative expenses in 2010, or 22.1% increase in constant currency, was due to:
• a $428.8 million goodwill and intangible asset impairment charge in the fourth quarter of 2010 related to Right
Management and Jefferson Wells as compared to a $61.0 million goodwill impairment charge recorded in the third
quarter of 2009 related to Jefferson Wells (see Note 1 to the Consolidated Financial Statements for further information);
• 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