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42 ManpowerGroup 2011 Annual Report Management’s Discussion & Analysis
MANAGEMENT’S DISCUSSION & ANALYSIS
of financial condition and results of oper ations
In February 2009, the French Competition Council rendered its decision and levied a fine of €42.0 million ($55.9 million)
related to the competition investigation that began in November 2004, conducted by France’s Direction Generale de la
concurrence, de la Consommation et de la Repression des Fraudes (“DGCCRF”), a body of the French Finance Minister
that investigates frauds and competition violations. We had accrued for this fine as of December 31, 2008, paid this fine in
April 2009 and appealed the Competition Council’s decision. In January 2010 we received notification that our appeal was
denied and in March 2010, we again appealed the Competition Council’s decision to the Cour de Cassation. In March 2011,
the Cour de Cassation, France’s highest court of appeal, confirmed the decision.
The French government announced new legislation in 2011 that reduces employer payroll tax subsidies that are received
under their social programs aimed at reducing the cost of labor and encouraging employment of low-wage workers. In
France, this new legislation increased our direct costs, unfavorably impacting our margin by approximately 100 basis
points in 2011. We currently expect to pass on this additional cost through higher 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 when dividends paid to shareholders have increased compared to the average dividend
paid over the previous two fiscal years. We are currently assessing the impact that this legislation may have on our
financials, but we do not expect the new legislation to have a material impact on our financial results in the near term.
The Agency Workers Directive (“AWD”) impacts all EU member states and was passed to ensure “equal treatment” for
agency (temporary) workers. It also requires all member states to review and address unnecessary prohibitions and
restrictions on the use of agency workers. Equal treatment has been in place by law in many countries; therefore, we do not
expect any significant changes other than the removal of some restrictions in certain of these countries, which could have
a favorable impact on our business. The United Kingdom, however, was the least regulated staffing market in Europe and
put various regulations into effect in October 2011 as a result of AWD. We currently do not anticipate any significant impact
on our business from these changes.
RECENTLY ISSUED ACCOUNTING STANDARDS
In December 2010, the FASB issued new accounting guidance on goodwill impairment testing. The new guidance modifies
Step 1 of the 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. The new guidance clarifies the
acquisition date that should be used for reporting the pro forma financial information disclosures when comparative
financial statements are presented. The guidance also expands the supplemental pro forma disclosures. We adopted this
guidance effective January 1, 2011. There was no impact of this adoption on our Consolidated Financial Statements.
In May 2011, the FASB issued new accounting guidance on fair value measurement. The new guidance clarifies some
existing concepts, eliminates wording differences between U.S. Generally Accepted Accounting Principles (“GAAP”) and
International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some principles to achieve
convergence between U.S. GAAP and IFRS. The new guidance results in a consistent definition of fair value and common
requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. It also expands the
disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The guidance is
effective for us in 2012 and must be applied prospectively. We do not expect the adoption of this guidance to have a
material impact on our Consolidated Financial Statements.