ManpowerGroup 2012 Annual Report Download - page 45

The table below provides a sample of our reporting units’ estimated fair values and carrying values, which were determined
as part of our annual goodwill impairment test performed in the third quarter ended September 30, 2012. The reporting
units included below represent 70% of our consolidated goodwill balance as of September 30, 2012.
(in millions) United States Netherlands (Vitae) France Right Management
Estimated fair values $1,233.4 $177.8 $992.2 $175.5
Carrying values 1,045.3 122.4 522.7 128.2
In the fourth quarter of 2010, two of our reporting units, Right Management and Jefferson Wells, each experienced strong
indicators of impairment due to continued deterioration in market conditions. They each experienced further than anticipated
profitability declines in the fourth quarter, which led us to adjust our long-term outlooks for each reporting unit. As a result,
we performed an impairment test of our goodwill and indefinite-lived intangible assets during the fourth quarter of 2010,
which resulted in a non-cash impairment charge of $311.6 million ($311.6 million after-tax) for goodwill associated with
Right Management and Jefferson Wells. In addition, we incurred a non-cash impairment charge of $117.2 million ($72.7
million after-tax) for the tradenames associated with these two reporting units. The goodwill and intangible asset impairment
charge was non-cash in nature and did not impact our liquidity, cash flows provided by operating activities or future
operations. (See Note 1 to the Consolidated Financial Statements for further information.)
Significant Matters Affecting Results of Operations
MARKET RISKS
We are exposed to the impact of foreign currency exchange rate fluctuations and interest rate changes.
Exchange Rates — Our exposure to foreign currency exchange rates relates primarily to our foreign subsidiaries and our
euro-denominated borrowings. For our foreign subsidiaries, exchange rates impact the United States dollar value of our
reported earnings, our investments in the subsidiaries and the intercompany transactions with the subsidiaries.
Approximately 85% of our revenues and profits are generated outside of the United States, with approximately 44%
generated from our European operations that use the euro as their functional currency. As a result, fluctuations in the value
of foreign currencies against the United States dollar, particularly the euro, may have a significant impact on our reported
results. Revenues and expenses denominated in foreign currencies are translated into United States dollars at the monthly
weighted-average exchange rates for the year. Consequently, as the value of the United States dollar changes relative to the
currencies of our major markets, our reported results vary.
Throughout 2012 and 2011, the United States dollar was volatile, but generally strengthened, against many of the currencies
of our major markets. Revenues from services in constant currency were approximately 5.0% higher than reported in 2012,
and 5.0% lower than reported in 2011. If the United States dollar had strengthened an additional 10% during 2012, revenues
from services would have decreased by approximately 8.5% from the amounts reported. If the United States dollar had
weakened an additional 10% during 2011, revenues from services would have increased by approximately 8.5% from the
amounts reported.
Fluctuations in currency exchange rates also impact the United States dollar amount of our shareholders’ equity. The
assets and liabilities of our non-United States subsidiaries are translated into United States dollars at the exchange rates in
effect at year-end. The resulting translation adjustments are recorded in shareholders’ equity as a component of
accumulated other comprehensive income. The United States dollar weakened relative to many foreign currencies as of
December 31, 2012 compared to December 31, 2011. Consequently, shareholders’ equity increased by $8.0 million as a
result of the foreign currency translation as of December 31, 2012. If the United States dollar had weakened an additional
10% as of December 31, 2012, resulting translation adjustments recorded in shareholders’ equity would have increased by
approximately $47.0 million from the amounts reported.
As of December 31, 2011, the United States dollar strengthened relative to many foreign currencies compared to December
31, 2010. Consequently, shareholders’ equity decreased by $42.3 million as a result of the foreign currency translation as of
December 31, 2011. If the United States dollar had strengthened an additional 10% as of December 31, 2011, resulting
translation adjustments recorded in shareholders’ equity would have increased by approximately $145.4 million from the
amounts reported.
Management’s Discussion & Analysis ManpowerGroup 2012 Annual Report 43