ManpowerGroup 2014 Annual Report Download - page 29

ManpowerGroup | Annual Report 2014 27
The year-over-year 20 basis point (0.20%) increase in gross profit margin was primarily attributed to:
• a 20 basis point (0.20%) favorable impact from the improvement in our staffing/interim margin as increases in Southern
Europe and APME were partially offset by a decrease in Northern Europe, while the Americas remained flat; and
• a 20 basis point (0.20%) favorable impact resulting from a 13.3% constant currency increase in our permanent recruitment
business; partially offset by
• a 10 basis point (–0.10%) unfavorable impact from decreased demand for our higher-margin outplacement services at
Right Management; and
• a 10 basis point (–0.10%) decline from our other business offerings, primarily a result of costs related to a contract termination.
The 3.0% decline in selling and administrative expenses in 2014 (–1.6% in constant currency and –2.6% in organic constant
currency) was attributed to:
• a decrease in restructuring costs with zero in 2014 and $89.4 million in 2013, comprised of $18.0 million in the Americas,
$7.8 million in Southern Europe, $39.0 million in Northern Europe, $6.2 million in APME, $14.0 million at Right Management
and $4.4 million in corporate expenses;
• a 7.7% decrease in lease and office-related costs because we closed over 200 offices in 2014 as a result of office
consolidations and delivery model changes; and
• a decrease in other non-personnel related costs, excluding the lease and office-related costs noted above, as a result of
the simplification and cost recalibration actions taken; partially offset by
• legal costs of $9.0 million recorded in the United States related to a settlement agreement (see the Employment-Related
Items section of Management’s Discussion and Analysis for additional information);
• a 1.2% increase in organic salary-related costs primarily from an increase in our variable incentive-based costs due to
improved operating results; and
• the additional recurring selling and administrative costs incurred as a result of the acquisitions in Southern Europe,
Northern Europe and APME.
Selling and administrative expenses as a percent of revenues decreased 80 basis points (–0.80%) in 2014. The change in
selling and administrative expense as a percent of revenues primarily consisted of:
• a 50 basis point (–0.50%) favorable impact due to the decrease of restructuring costs noted above; and
• a 30 basis point (–0.30%) favorable impact due to the decrease of non-personnel related costs: –20 basis points due to
the decrease in our lease and office-related costs and –10 basis points due to the decrease in other non-personnel
related costs primarily as a result of the simplification and cost recalibration actions taken.
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 $38.3 million in 2014 compared to $36.4 million in
2013. Net interest expense decreased $1.9 million in 2014 to $31.5 million from $33.4 million in 2013 due to lower debt
levels as we repaid our €200 million Notes in June 2013 with cash. Other expenses were $6.8 million in 2014 compared to
$3.0 million in 2013. Translation gains in 2014 were $2.2 million compared to translation losses of $2.3 million in 2013. The
translation gains in 2014 were primarily due to payments received in Venezuela in foreign currencies other than Venezuelan
Bolivar Fuerte and translated at favorable exchange rates other than the official exchange rate and translation gains resulting
from intercompany transactions between our foreign subsidiaries and the United States. Miscellaneous expenses, net were
$9.0 million in 2014 compared to $0.7 million in 2013. This increase in net expenses is primarily related to the earnings in a
few of our equity investments and a loss on sale of an equity investment in the United States in 2014.
Management’s Discussion & Analysis