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ManpowerGroupTM 2010 Annual Report

Table of contents

  • Page 1
    ManpowerGroup 2010 Annual Report TM

  • Page 2
    ...[ I` ` [OL L YH^ ma ater rials tha at transform med them m - st tone, iron HUK IYVUaL" [O OLU I` [O OL KVT THPU UZ WL LVWSL L JVUX\ \LYLK· · PU UK\Z Z[Y` ZWH HJL HU UK PUMV VYTH H[PVU 5V V^ P[ ^PSS IL O\T THU WV[ [LU U[PHS P[ZLSM [OH[ ^PSS IL [OL L JH H[HS`Z[ MVY JOH HUNL L HU...

  • Page 3
    1

  • Page 4
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  • Page 5
    It's s no ot abo out tec chno olo ogy y. Or sys stem ms. Or money y. The e talen nt, am mbition n and imag ginat tion of people e will be the key y build ding bloc cks of growth. 3

  • Page 6
    On nly the co ompa anie es that t know w ho ow to o conne ect th heir ambitio ons to o the e passions of the eir peo ople, from m CEO-leve el to o factory wo ork ker, willl be the on nes who succ ceed d. 4

  • Page 7
    5

  • Page 8
    ... the talent they need when they need it. ManpowerGroupâ„¢ Solutions provides clients with human resources outsourcing services primarily in the areas of large-scale recruiting and outcome-based workforce-intensive initiatives, thereby sharing in the risk and reward with our clients. Experisâ„¢ is...

  • Page 9
    7

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    8

  • Page 11
    ... and impairment charges, only increased by $226 million, creating strong operating leverage. We also effectively managed our capital, with a three-day improvement in our average day's sales outstanding. This excellent performance was generated MYVT HSS JVYULYZ VM V\Y I\ZPULZZ" MYVT TH[\YL HZ ^LSS HZ...

  • Page 12
    ... [V IYPUN HIV\[ H UL^ HNL ;OL L]PKLUJL PZ HSS HYV\UK \Z ;OYV\NO [OL YLJLZZPVU HUK UV^ PU[V [OL YLJV]LY`...PVU HUK \UKLYZ[HUKPUN OV^ [V LUNHNL ^P[O [OH[ PUKP]PK\HS VU H O\THU SL]LS [V \USLHZO OPZ VY OLY M\SS WV[LU[PHS JHU THRL HSS [OL JVTWL[P[P]L ...ManpowerGroup 2010 Annual Report Shareholder's Letter

  • Page 13
    FORTUNE is a registered trademark of Time Inc. and is used under license. From FORTUNE Magazine, March 21, 2011 © 2011 Time Inc. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Licensee. 11

  • Page 14
    ... 3PUL .YVZZ 7YVÄ[ In billions ($) Staffing $2.0 Talent and Career Management $0.2 ManpowerGroup Solutions Professional Resourcing $0.4 $0.3 Permanent Recruitment $0.3 24 Revenue In billions ($) 18 12 6 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12

  • Page 15
    ...to the ambitions of clients. We are leveraging our unmatched global footprint, because access to talent will become the key differentiator in the Human Age. We are the ManpowerGroup. We are a family of brands and suite of offerings built for solutions and speed that help our clients win. We are the...

  • Page 16
    We are ManpowerGroup Solutions, the global leader in human resources outsourcing services primarily in the areas of large-scale recruiting and outcome-based workforce-intensive initiatives, thereby sharing in the risk and reward with our clients. Our solutions offerings include Talent Based ...

  • Page 17
    ... from around the world and partnering with CNBC to kick off the Annual Meeting of the World Economic Forum in Davos, Switzerland in January, ManpowerGroup Chairman and CEO Jeff Joerres announced that the world has entered the Human Age. Shareholder's Letter ManpowerGroup 2010 Annual Report 15

  • Page 18
    ...countries and territories allow us to meet the needs of clients in all industry segments. Systemwide Offices represents our branch offices plus the offices operating under a franchise agreement with us. 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 16 ManpowerGroup 2010 Annual Report At a Glance

  • Page 19
    ... on revenues generated by the franchise offices, which were $1,497.0 million, $1,408.5 million, $1,148.1 million, $746.7 million and $968.0 million for 2006, 2007, 2008, 2009 and 2010, respectively. In the United States, where the majority of our franchises operate, Revenues from Services includes...

  • Page 20
    ...21 Financial Measures 41 Management Report on Internal Control Over Financial Reporting 42 Report of Independent Registered Public Accounting Firm 44 Consolidated Statements... Financial Statements 78 Selected Financial Data 78 Performance Graph 79 Principle Operating Units 80 Corporate Information

  • Page 21
    ... and builds more sustainable communities. We power the world of work. By offering a complete range of workforce solutions and services, we can help any company - no matter where they are in their business evolution - raise productivity, improve strategy, quality, efficiency and cost reduction...

  • Page 22
    ... nature of our business, we generally do not have export or intersegment sales. We provide services to a wide variety of clients, none of which individually comprises a significant portion of revenue for us as a whole or for any segment. 20 ManpowerGroup 2010 Annual Report Management's Discussion...

  • Page 23
    ... when we will return to prior revenue and earnings levels. On April 5, 2010, we completed our acquisition of COMSYS IT Partners, Inc. ("COMSYS") from its existing shareholders. The value of the consideration for each outstanding share of COMSYS common stock was approximately $17.65, for a total...

  • Page 24
    ... margins resulting from the acquisition of COMSYS; s a 15 basis point (0.15%) impact due to an increase in the permanent recruitment business; and s a 14 basis point (0.14%) impact due to a change in the mix of our services. 22 ManpowerGroup 2010 Annual Report Management's Discussion & Analysis

  • Page 25
    ... as a component of income tax beginning in January 2010, in accordance with the current accounting guidance on income taxes. Prior to January 2010, the French Business Tax had been presented as a component of Cost of Services. The French government changed the business tax from an asset-based tax to...

  • Page 26
    ... than the Company average, and margin expansion at Right Management resulting from the significant growth in the outplacement business; and s a 7 basis point (+0.07%) increase due to the impact of currency exchange rates on the mix of our business. 24 ManpowerGroup 2010 Annual Report Management...

  • Page 27
    ... swap agreements and amended revolving credit facility of $4.6 million net of tax, or $0.06 per diluted share in 2009; and s the loss from the sale of an equity investment in Japan of $5.3 million net of tax, or $0.06 per diluted share in 2009. Management's Discussion & Analysis ManpowerGroup 2010...

  • Page 28
    ... segment. All previously reported results have been restated to conform to the current year presentation. We evaluate performance based on Operating Unit Profit, which is equal to segment revenues less direct costs and branch and national headquarters operating costs. This profit measure does...

  • Page 29
    ...941.5 EMEA Operating Unit Profit in millions ($) 10 09 08 204.9 62.6 and Africa (excluding France), which covers a total of 35 countries, delivering services through approximately 1,414 offices. In addition to our workforce solutions and services delivered under the Manpower brand, this region...

  • Page 30
    ... costs. Right Management Revenues in millions ($) 10 09 08 Right Management - Right Management is a leading global provider of integrated 374.6 559.4 452.2 human capital consulting services and solutions across the employment lifecycle operating through 212 offices in over 50 countries. In 2010...

  • Page 31
    ... Impact of Acquisitions (In Constant Currency) Organic Constant Currency Variance Revenues from Services Americas: United States Other Americas France EMEA: Italy Other EMEA Asia Pacific Right Management ManpowerGroup Gross Profit - ManpowerGroup Operating Unit Profit Americas: United States...

  • Page 32
    ..., debt payments, interest expense, share repurchases, dividends and acquisitions. Working capital is primarily in the form of trade receivables, which generally increase as revenues increase. The amount of financing necessary to support revenue growth depends on receivables turnover, which...

  • Page 33
    ... purchases of computer equipment, office furniture and other costs related to office openings and refurbishments, as well as capitalized software costs of $1.4 million, $2.0 million and $6.3 million in 2010, 2009 and 2008, respectively. In April 2010, we acquired COMSYS IT Partners, Inc. ("COMSYS...

  • Page 34
    ... interest rate and facility fees, of any replacement borrowings will be dependent upon the condition of the credit markets at that time. We currently do not anticipate any problems accessing the credit markets should we need to replace our facilities. 32 ManpowerGroup 2010 Annual Report Management...

  • Page 35
    ... a proprietary methodology in determining their ratings and outlook which includes, among other things, financial ratios based upon debt levels and earnings performance. Both of the current credit ratings are investment grade. Management's Discussion & Analysis ManpowerGroup 2010 Annual Report 33

  • Page 36
    ... of return on plan assets, compensation increases and employee turnover rates. We determine our assumption for the discount rate to be used for purposes of computing annual service and interest costs based on an index of high-quality corporate bond yields and matched-funding yield curve analysis as...

  • Page 37
    ...our consulting business, revenue is recognized upon the performance of the service under the consulting service contract. For performance-based contracts, we defer recognizing revenue until the performance criteria has been met. Management's Discussion & Analysis ManpowerGroup 2010 Annual Report 35

  • Page 38
    ...fair value of our reporting units below their carrying value. We performed our annual impairment test of our goodwill and indefinite-lived intangible assets during the third quarter of 2010. There was no impairment of our goodwill or indefinite-lived intangible assets recorded in the third quarter...

  • Page 39
    ... and tradename recorded for Right Management was impaired. The accounting guidance requires a two-step method for determining goodwill impairment. In the first step, we determined the fair value of each reporting unit, generally by utilizing an income approach derived from a discounted cash ï¬,ow...

  • Page 40
    ... Management at the asset group level and determined that the undiscounted cash ï¬,ows were in excess of the carrying value. As such, no impairment of these assets was recognized. We did not perform an interim impairment test on any of our other reporting units with goodwill and indefinite-lived...

  • Page 41
    ... due June 2013 â,¬300, 4.58% Notes due June 2012 Forward contracts: £2.9 to $4.5 $ 26.8(1) 40.2(1) 0.5 67.5 $ (26.8)(1) (40.2)(1) (0.5) (67.5) $ $ (1) Exchange rate movements are recorded through Accumulated Other Comprehensive Income (Loss) as these instruments have been designated as an...

  • Page 42
    ... forward. 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. This new legislation increases our direct costs. There is no...

  • Page 43
    ... Financial Statements. 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. The guidance will be effective for us in 2011. We do not...

  • Page 44
    ... of the Treadway Commission and our report dated February 24, 2011 expressed an unqualified opinion on the Company's internal control over financial reporting. Milwaukee, Wisconsin February 24, 2011 42 ManpowerGroup 2010 Annual Report Report of Independent Registered Public Accounting Firm

  • Page 45
    ... opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance...

  • Page 46
    ...share data Year Ended December 31 2010 2009 2008 Revenues from services Cost of services Gross profit Selling and administrative expenses, excluding impairment charges Goodwill....3 78.3 $ $ $ 205.5 2.61 2.58 78.7 79.7 44 ManpowerGroup 2010 Annual Report Consolidated Statements of Operations

  • Page 47
    ....6 527.2 176.4 $ 6,729.7 $ 6,213.8 Current Liabilities Accounts payable Employee compensation payable Accrued liabilities Accrued payroll taxes and insurance Value added taxes payable Short-term borrowings and current maturities of long-term debt Total current liabilities Other Liabilities Long...

  • Page 48
    ... Deferred income taxes Provision for doubtful accounts Loss from sale of an equity investment Share-based compensation Excess tax benefit on exercise of stock options Change in operating assets and liabilities, excluding the impact of acquisitions: Accounts receivable Other assets Other liabilities...

  • Page 49
    ... plans and retiree health care plan, net of tax Total comprehensive loss Issuances under equity plans, including tax benefits 699,244 Issuance for business acquisition 3,197,396 Share-based compensation expense Dividends ($0.74 per share) Repurchases of common stock Other Balance, December 31, 2010...

  • Page 50
    ... and cost of services. When we act as an agent, we report the revenues on a net basis. Amounts billed to clients for out-of-pocket or other cost reimbursements are included in Revenues from Services, and the related costs are included in Cost of Services. 48 ManpowerGroup 2010 Annual Report Notes...

  • Page 51
    ... (1) France EMEA (2) Asia Pacific Right Management Corporate Total Balance, January 1, 2009 Severance costs Office closure costs Costs paid or utilized Balance, December 31, 2009 Severance costs Office closure costs Costs paid or utilized Balance, December 31, 2010 $ 8.9 5.8 2.9 (13...

  • Page 52
    ...- - We determine the fair value of our available-for-sale securities and deferred compensation plan assets, comprised of publicly traded securities, by using market quotes as of the last day of the period. The fair value of the interest rate swaps and foreign currency forward contracts are measured...

  • Page 53
    ... from our franchise acquisitions in the U.S. completed prior to 2009. In accordance with the accounting guidance on goodwill and other intangible assets, we perform an annual impairment test of goodwill at our reporting unit level and indefinite-lived intangible assets at our unit of account level...

  • Page 54
    ... and tradename recorded for Right Management was impaired. The accounting guidance requires a two-step method for determining goodwill impairment. In the first step, we determined the fair value of each reporting unit, generally by utilizing an income approach derived from a discounted cash ï¬,ow...

  • Page 55
    CAPITALIZED SOFTWARE FOR INTERNAL USE We capitalize purchased software as well as internally developed software. Internal software development costs are capitalized from the time the internal use software is considered probable of completion until the software is ready for use. Business analysis, ...

  • Page 56
    ...-earnings method, a form of the income approach. Some of the significant assumptions used in this valuation included: expected revenue growth rates, operating unit profit margins, capital charges representing 1.3% of revenues, and a 13% discount rate. 54 ManpowerGroup 2010 Annual Report Notes...

  • Page 57
    ... acquired and liabilities assumed as of the acquisition date of April 5, 2010: Cash and cash equivalents Accounts receivable, net Prepaid expenses and other assets Total current assets Goodwill Intangible assets Other assets Property and equipment Total assets Accounts payable Employee compensation...

  • Page 58
    ...127.3, respectively. Goodwill and intangible assets resulting from these 2010 acquisitions were $26.2 and $6.4, respectively, as of December 31, 2010. 03. Stock Compensation Plans We account for share-based payments according to the accounting guidance on share-based payments. During 2010, 2009 and...

  • Page 59
    ...-employee directors may elect to receive deferred stock in lieu of part or all of their annual cash retainer otherwise payable to them. The number of shares of deferred stock is determined pursuant to a formula set forth in the terms and conditions adopted under the 2003 Plan and the deferred stock...

  • Page 60
    ... shares of our common stock. A payout multiple is applied to the units awarded based on the performance criteria determined by the Executive Compensation and Human Resources Committee of the Board of Directors at the time of grant. In February 2007, 2008 and 2010, we granted performance share units...

  • Page 61
    ... using the same methodology applied in determining the assumptions used in calculating the fair value of our stock options. We also maintain the Savings Related Share Option Scheme for United Kingdom employees with at least one year of service. The employees are offered the opportunity to obtain...

  • Page 62
    ...included as a component of Cost of Services. The French Government changed the business tax from an asset-based tax to an income-based tax, thereby requiring the classification of this tax as income tax effective January 1, 2010. 60 ManpowerGroup 2010 Annual Report Notes to Consolidated Financial...

  • Page 63
    ...rate expected to be in effect when the temporary differences reverse. Temporary differences, which gave rise to the deferred taxes are as follows: Year Ended December 31 2010 2009 Current Future Income Tax Benefits (Expense) Accrued payroll taxes and insurance Employee compensation payable Pension...

  • Page 64
    ... to tax audits in France, Belgium, Denmark, and Norway and the IRS will audit 2008 and 2009 beginning in 2011. We believe that resolution of such audits will not have a material impact on earnings. 06. Goodwill Changes in the carrying value of goodwill by reportable segment and Corporate are as...

  • Page 65
    The majority of the Corporate balance as of December 31, 2010 relates to goodwill attributable to our acquisition of Jefferson Wells ($55.5) which is now part of the United States reporting unit. For purposes of monitoring our total assets by segment, we do not allocate the Corporate balance to the ...

  • Page 66
    ... expense, which was recorded in the third quarter. DEBT MATURITIES The maturities of Long-term debt payable within each of the four years subsequent to December 31, 2011 are as follows: 2012 - $401.8, 2013 - $267.5, 2014 and 2015 - none. 64 ManpowerGroup 2010 Annual Report Notes to Consolidated...

  • Page 67
    ... (Loss), net of tax, consist of: U.S. Plans Year Ended December 31 2010 2009 2010 Non-U.S. Plans 2009 Net loss (gain) Prior service cost Total $ $ 9.3 0.2 9.5 $ $ 6.0 0.3 6.3 $ $ 2.4 7.2 9.6 $ $ (0.6) 7.5 6.9 Notes to Consolidated Financial Statements ManpowerGroup 2010 Annual Report 65

  • Page 68
    ... December 31 2010 2009 2008 2010 2009 Non-U.S. Plans 2008 Discount rate Expected long-term return on plan assets Rate of compensation increase 5.7% 7.3% 4.0% 6.4% 7.3% 4.0% 6.3% 7.5% 4.5% 5.5% 5.5% 4.5% 5.7% 5.7% 4.2% 5.0% 5.4% 4.2% 66 ManpowerGroup 2010 Annual Report Notes to Consolidated...

  • Page 69
    ... for the discount rate to be used for purposes of computing annual service and interest costs based on an index of high-quality corporate bond yields and matched-funding yield curve analysis as of the end of each fiscal year. Our overall expected long-term rate of return on U.S. plan assets is...

  • Page 70
    ...Unobservable Inputs (Level 3) Asset Category Cash and cash equivalents(1) Equity securities: U.S. companies International companies Fixed income securities: Government bonds(2)(3) Corporate bonds(3) Bank loans Guaranteed insurance contracts Other types of investments: Equity hedge funds Real estate...

  • Page 71
    ... during 2011. The health care cost trend rate was assumed to be 8.0% for 2010, decreasing gradually to 5.0% for the years 2016 and beyond. Assumed health care cost trend rates have a significant effect on the amounts reported. A one-percentage point change in the assumed health care cost trend rate...

  • Page 72
    ... the Amended Revolving Credit Agreement and our termination of the interest rate swap agreements. Loss from sale of an equity investment in 2009 resulted as we sold an equity investment in Japan for cash proceeds of $13.3 in September 2009. 70 ManpowerGroup 2010 Annual Report Notes to Consolidated...

  • Page 73
    ... under our Revolving Credit Agreement and terminated the related interest rate swap agreements on October 16, 2009. Our interest rate swap agreements had been designated as cash ï¬,ow hedges of the interest costs on our Euro-denominated variable rate borrowings. The interest rate swap agreements had...

  • Page 74
    ..., training and development, and ManpowerGroup Solutions. ManpowerGroup Solutions includes Talent Based Outsourcing (TBO), Managed Service Programs (MSP), Borderless Talent Solutions (BTS) and Recruitment Process Outsourcing (RPO). The Right Management segment revenues are derived from career...

  • Page 75
    Year Ended December 31 2010 (a) 2009 2008 Revenues from Services Americas: United States(b) Other Americas France EMEA: Italy Other EMEA Asia Pacific Right Management $ 2,783.4 1,265.5 4,048.9 5,208.6 1,044.2 6,043.0 7,087.2 2,147.2 374.6 $ 1,786.0 967.3 2,753.3 4,675.5 950.8 5,371.7 6,322...

  • Page 76
    ...FINANCIAL STATEMENTS in millions, except share and per share data Year Ended December 31 2010 2009 2008 Depreciation and Amortization Expense Americas: United States Other Americas France EMEA: Italy Other EMEA Asia Pacific Right Management Corporate Amortization of intangible assets(a) $ 15...

  • Page 77
    Year Ended December 31 2010 2009 2008 Total Assets Americas: United States Other Americas France EMEA: Italy Other EMEA Asia Pacific Right Management Corporate(a) $ 1,361.4 257.6 1,619.0 1,826.0 271.3 1,852.8 2,124.1 395.1 86.1 679.4 $ 630.7 218.9 849.6 2,220.1 239.7 1,560.7 1,800.4 314.4 ...

  • Page 78
    ... TO CONSOLIDATED FINANCIAL STATEMENTS in millions, except share and per share data Year Ended December 31 2010 2009 2008 Long-Lived Assets Americas: United States Other Americas France EMEA: Italy Other EMEA Asia Pacific Right Management Corporate (a) $ 39.7 9.7 49.4 43.2 7.7 54.2 61.9 17...

  • Page 79
    ... charge, ($0.07) per share for the loss on the sale of an equity investment and ($0.06) per share related to the extinguishment of our interest rate swap agreements and revolving credit facility. Also included in the results are reorganization costs of ($0.06) per diluted share in the first quarter...

  • Page 80
    ... Officer certifications that are required by Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to its Annual Report on Form 10-K. In 2010, Jeffrey A. Joerres, Manpower Inc.'s Chief Executive Officer, submitted a certification to the New York Stock Exchange in accordance with Section 303A...

  • Page 81
    ...New Caledonia, New Zealand, Nicaragua, Norway, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Puerto Rico, Reunion, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates...

  • Page 82
    ..., CEO and President MICHAEL J. VAN HANDEL Executive Vice President and CFO DARRYL GREEN Chief Executive Marks and Spencer Group G I N A B O S W E L L 1,3 Executive Vice President President - Asia Pacific and Middle East FRANÇOISE GRI President of Global Brands The Alberto-Culver Company CARI...

  • Page 83
    ... writing to: Kenneth C. Hunt ManpowerGroup 100 Manpower Place Milwaukee, WI 53212 USA SHAREHOLDERS As of February 22, 2011, Manpower Inc. common stock was held by approximately 4,500 record holders. ANNUAL MEETING OF SHAREHOLDERS May 3, 2011 at 10 a.m. ManpowerGroup World Headquarters 100 Manpower...

  • Page 84
    www.manpowergroup.com ManpowerGroup 100 Manpower Place Milwaukee Wisconsin, 53212 GC-35 © 2011 ManpowerGroup. All rights reserved.