ManpowerGroup 2012 Annual Report Download - page 33

• the additional recurring selling and administrative costs as a result of the acquisitions of COMSYS in April 2010, and the
APME and Proservia acquisitions in 2011; and
• a 3.7% increase due to the impact of currency exchange rates.
Selling and administrative expenses as a percent of revenues decreased 330 basis points (–3.30%) in 2011 compared to
2010. The change in selling and administrative expenses as a percent of revenues consists of:
• a 230 basis point (–2.30%) decrease due to the goodwill and intangible asset impairment charge recorded in 2010 as
compared to no impairment charge recorded in 2011; and
• a 100 basis point (–1.00%) decrease due primarily to productivity enhancements and expense leveraging, as an 8.3%
(or 4.1% in constant currency) increase in expense, excluding the 2010 goodwill and intangible asset impairment charge,
supported the 16.6% increase in revenues (or 11.6% in constant currency).
Interest and other expenses are comprised of interest, foreign exchange gains and losses and other miscellaneous non-
operating income and expenses. Interest and other expenses were $44.3 million in 2011 compared to $43.2 million in 2010.
Net interest expense decreased $2.0 million in 2011 to $35.5 million from $37.5 million in 2010 due primarily to the $2.2
million of interest expense we incurred in 2010 related to the write-off of COMSYS’s deferred financing costs. Other
expenses increased $3.1 million in 2011 due primarily to an increase in expenses related to the noncontrolling interests in
our majority-owned subsidiaries as a result of an increase in their earnings and current year acquisitions. Offsetting this
increase was a decrease in translation losses of $0.5 million in 2011. This decrease was primarily related to a $1.2 million
translation loss in January 2010 for Venezuela as a result of the Venezuela reporting unit’s currency (Bolivar Fuerte) being
devalued and our changing the functional currency of our Venezuela reporting unit to the United States dollar as the result
of its economy being deemed hyperinflationary.
We recorded an income tax expense at an effective rate of 47.6% for 2011 compared to an income tax expense at an
effective rate of 59.5% for 2010. The change in rate was due to the non-deductibility of the goodwill impairment charges in
2010 related to Right Management and Jefferson Wells as well as a significant change in the amount and mix of non-United
States earnings and related cash repatriations and other permanent items. The 2011 rate was favorably impacted by the
overall mix of earnings, primarily an increase in non-United States income. The 2011 rate is higher than the United States
Federal statutory rate of 35% due primarily to the impact of non-United States income taxes, other permanent items and
the French business tax.
Net earnings (loss) per share — diluted was earnings of $3.04 in 2011 compared to a loss of ($3.26) in 2010. This increase
was primarily related to the impact from the goodwill and intangible asset impairment charge ($384.3 million, net of tax, or
$4.73 per diluted share) in 2010 that did not occur in 2011, an increase in operating earnings (excluding the impairment) and
a $0.22 per share favorable impact from changes in currency exchange rates.
Weighted average shares — diluted increased 2.3% to 82.8 million in 2011 from 81.0 million in 2010. This increase was
primarily a result of a fewer antidilutive shares excluded from the calculation in 2011 compared to 2010. In 2011, only those
stock-based awards with exercise prices greater than the average market price of the common shares during 2011 were
excluded from the weighted average shares — diluted calculation. Due to the net loss in 2010, all of the stock-based
awards were antidilutive and therefore were excluded from the weighted average shares — diluted calculation.
SEGMENT RESULTS
We evaluate performance based on operating unit profit (“OUP”), which is equal to segment revenues less direct costs and
branch and national 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.
Americas — The Americas segment is comprised of 794 Company-owned branch offices and 175 stand-alone franchise
offices. In the Americas, revenues from services decreased 1.2% (0.5% increase in constant currency and 0.4% increase
in organic constant currency) in 2012 compared to 2011. In the United States, revenues from services declined 4.0% in
2012 compared to 2011. The revenue decline in the United States was attributable to staffing/interim services within the
Manpower and Experis business lines as demand from our larger strategic accounts softened in 2012 compared to 2011,
and we maintained stronger pricing discipline on new business opportunities. These declines were partially offset by an
increase in United States permanent recruitment revenues of 17.3% in 2012 compared to 2011. In Other Americas, revenues
from services improved 4.8% (9.9% in constant currency and 9.6% on an organic constant currency basis) in 2012
compared to 2011, led by revenue growth in Canada, Mexico and Argentina of 19.2%, 10.0% and 8.2%, respectively, in
constant currency (16.2% growth in Canada on an organic constant currency basis).
Management’s Discussion & Analysis ManpowerGroup 2012 Annual Report 31