Manpower Inc. Reports 3rd Quarter 2010 Results

Manpower Inc.

Results of Operations

(In millions, except per share data)

Three Months Ended September 30

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from services (a) (b)

$ 4,972.0

$ 4,189.6

18.7%

24.1%

Cost of services

4,130.8

3,485.5

18.5%

24.1%

 Gross profit

841.2

704.1

19.5%

24.4%

Selling and administrative expenses

732.3

664.6

10.2%

14.4%

Goodwill and intangible asset impairment charges (c)

-

61.0

N/A

N/A

 Selling and administrative expenses

732.3

725.6

0.9%

4.8%

 Operating profit (loss)

108.9

(21.5)

N/A

N/A

Interest and other expenses

8.4

29.3

-71.4%

 Earnings (loss) before income taxes

100.5

(50.8)

N/A

N/A

Provision for income taxes

49.2

2.0

N/A

 Net earnings (loss)

$      51.3

$    (52.8)

N/A

N/A

Net earnings (loss) per share - basic

$      0.63

$    (0.67)

N/A

Net earnings (loss) per share - diluted

$      0.62

$    (0.67)

N/A

N/A

Weighted average shares - basic

81.9

78.4

4.5%

Weighted average shares - diluted

82.7

78.4

5.5%

(a)  Revenues from services include fees received from our franchise offices of $6.8 million and $5.7 million for the three months ended September 30, 2010 and 2009, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $273.3 million and $200.3 million for the three months ended September 30, 2010 and 2009, respectively.

(b)  Our 2009 results have been restated as disclosed in Note 16 to the Consolidated Financial Statements included in our 2009 Annual Report to Shareholders.

(c)  The goodwill impairment charge for the three months ended September 30, 2009 relates to our investment in Jefferson Wells. The impact on net earnings is $61.0 million, or $0.78 per diluted share, for the three months ended September 30, 2009.

Manpower Inc.

Operating Unit Results

(In millions)

Three Months Ended September 30

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from Services:

 Americas:

     United States  (a)

$    752.1

$    409.8

83.5%

83.5%

     Other Americas

317.1

243.5

30.3%

25.8%

1,069.2

653.3

63.7%

62.0%

 France

1,411.6

1,314.1

7.4%

18.8%

 EMEA:

     Italy

257.1

231.0

11.3%

23.1%

     Other EMEA (b)

1,548.0

1,379.3

12.2%

19.6%

1,805.1

1,610.3

12.1%

20.1%

 Asia Pacific

555.7

427.9

29.8%

20.5%

 Right Management

85.5

135.7

-37.0%

-36.5%

 Jefferson Wells

44.9

48.3

-6.9%

-6.9%

$ 4,972.0

$ 4,189.6

18.7%

24.1%

Operating Unit Profit (Loss) (c):

 Americas:

     United States  (a)

$      27.4

$        1.7

N/A

N/A

     Other Americas

8.2

5.5

49.4%

43.2%

35.6

7.2

395.3%

390.5%

 France

25.0

10.6

135.6%

160.6%

 EMEA:

     Italy

11.4

8.6

30.7%

44.6%

     Other EMEA (b)

43.0

16.0

171.0%

190.8%

54.4

24.6

121.5%

139.3%

 Asia Pacific

13.1

4.0

234.1%

210.9%

 Right Management

-

21.2

N/A

N/A

 Jefferson Wells

(1.5)

(0.6)

N/A

N/A

126.6

67.0

Corporate expenses

(23.6)

(21.1)

Goodwill and intangible asset impairment charge

-

(61.0)

Intangible asset amortization expense (c)

(11.6)

(6.4)

Reclassification of French business tax

17.5

-

   Operating profit (loss)

108.9

(21.5)

N/A

N/A

Interest and other expenses (d)

(8.4)

(29.3)

   Earnings (loss) before income taxes

$    100.5

$    (50.8)

(a)  The United States results include the results of COMSYS IT Partners, Inc., which was acquired on April 5, 2010. United States revenues from services include fees received from our franchise offices of $4.0 million and $3.0 million for the three months ended September 30, 2010 and 2009, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $169.0 million and $121.6 million for the three months ended September 30, 2010 and 2009, respectively.

(b)  Our 2009 results have been restated as disclosed in Note 16 to the Consolidated Financial Statements included in our 2009 Annual Report to Shareholders.

(c)  During the third quarter of 2010, we redefined Operating Unit Profit (Loss) to exclude intangible asset amortization. Therefore, these costs are no longer included as operating costs within the reportable segments and Corporate Expenses, and all intangible asset amortization expense is now shown separately. All previously reported results have been restated to conform to the current year presentation.

(d)  The components of interest and other expenses were:

2010

2009

       Interest expense

$      10.0

$      21.5

       Interest income

(1.2)

(1.7)

       Foreign exchange gains

(0.3)

(0.6)

       Miscellaneous income, net

(0.1)

(0.2)

       Loss from sale of an equity investment

-

10.3

$        8.4

$      29.3

Manpower Inc.

Results of Operations

(In millions, except per share data)

Nine Months Ended September 30

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from services (a) (b)

$ 13,656.9

$ 11,626.1

17.5%

18.0%

Cost of services

11,317.2

9,564.0

18.3%

19.0%

 Gross profit

2,339.7

2,062.1

13.5%

13.7%

Selling and administrative expenses

2,119.1

2,002.2

5.8%

5.8%

Goodwill and intangible asset impairment charges (c)

-

61.0

N/A

N/A

 Selling and administrative expenses

2,119.1

2,063.2

2.7%

2.7%

 Operating profit (loss)

220.6

(1.1)

N/A

N/A

Interest and other expenses

33.2

52.0

-36.2%

 Earnings (loss) before income taxes

187.4

(53.1)

N/A

N/A

Provision for income taxes

100.6

(14.8)

N/A

 Net earnings (loss)

$        86.8

$      (38.3)

N/A

N/A

Net earnings (loss) per share - basic

$        1.08

$      (0.49)

N/A

Net earnings (loss) per share - diluted

$        1.06

$      (0.49)

N/A

N/A

Weighted average shares - basic

80.7

78.3

3.1%

Weighted average shares - diluted

81.7

78.3

4.4%

(a)  Revenues from services include fees received from our franchise offices of $17.2 million and $16.6 million for the nine months ended September 30, 2010 and 2009, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $704.5 million and $533.3 million for the nine months ended September 30, 2010 and 2009, respectively.

(b)  Our 2009 results have been restated as disclosed in Note 16 to the Consolidated Financial Statements included in our 2009 Annual Report to Shareholders.

(c)  The goodwill impairment charge for the nine months ended September 30, 2009 relates to our investment in Jefferson Wells.  The impact on net earnings is $61.0 million, or $0.78 per diluted share, for the nine months ended September 30, 2009.

Manpower Inc.

Operating Unit Results

(In millions)

Nine Months Ended September 30

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from Services:

 Americas:

     United States  (a)

$   1,880.2

$   1,157.9

62.4%

62.4%

     Other Americas

917.7

683.4

34.3%

26.5%

2,797.9

1,841.3

52.0%

49.1%

 France

3,775.0

3,371.1

12.0%

17.4%

 EMEA:

     Italy

750.1

681.5

10.1%

14.9%

     Other EMEA (b)

4,361.3

3,894.0

12.0%

12.9%

5,111.4

4,575.5

11.7%

13.2%

 Asia Pacific

1,558.9

1,259.3

23.8%

13.7%

 Right Management

287.6

429.8

-33.1%

-34.2%

 Jefferson Wells

126.1

149.1

-15.4%

-15.4%

$ 13,656.9

$ 11,626.1

17.5%

18.0%

Operating Unit Profit (Loss) (c):

 Americas:

     United States  (a)

$        38.0

$      (15.4)

N/A

N/A

     Other Americas

26.5

14.2

87.1%

76.8%

64.5

(1.2)

N/A

N/A

 France

35.1

15.8

122.7%

148.0%

 EMEA:

     Italy

31.7

16.8

87.9%

99.5%

     Other EMEA (b)

91.6

8.2

N/A

N/A

123.3

25.0

392.8%

410.2%

 Asia Pacific

37.6

19.6

93.4%

76.6%

 Right Management

20.3

92.6

-78.0%

-78.9%

 Jefferson Wells

(9.3)

(18.3)

N/A

N/A

271.5

133.5

Corporate expenses

(70.4)

(56.6)

Goodwill and intangible asset impairment charge

-

(61.0)

Intangible asset amortization expense (c)

(28.1)

(17.0)

Reclassification of French business tax

47.6

-

   Operating profit (loss)

220.6

(1.1)

N/A

N/A

Interest and other expenses (d)

(33.2)

(52.0)

   Earnings (loss) before income taxes

$      187.4

$      (53.1)

(a)  The United States results include the results of COMSYS IT Partners, Inc., which was acquired on April 5, 2010. United States, revenues from services include fees received from our franchise offices of $9.9 million and $7.4 million for the nine months ended September 30, 2010 and 2009, respectively.  These fees are primarily based on revenues generated by the franchise offices, which were $457.0 million and $323.7 million for the nine months ended September 30, 2010 and 2009, respectively.

(b)  Our 2009 results have been restated as disclosed in Note 16 to the Consolidated Financial Statements included in our 2009 Annual Report to Shareholders.

(c)  During the third quarter of 2010, we redefined Operating Unit Profit (Loss) to exclude intangible asset amortization. Therefore, these costs are no longer included as operating costs within the reportable segments and Corporate Expenses, and all intangible asset amortization expense is now shown separately. All previously reported results have been restated to conform to the current year presentation.

(d)  The components of interest and other expenses were:

2010

2009

       Interest expense

$        33.6

$        48.5

       Interest income

(4.2)

(9.3)

       Foreign exchange losses

2.5

0.9

       Miscellaneous expenses, net

1.3

1.6

       Loss from sale of an equity investment

-

10.3

$        33.2

$        52.0

Manpower Inc.

Consolidated Balance Sheets

(In millions)

Sep. 30

Dec. 31

2010

2009

(Unaudited)

ASSETS

Current assets:

 Cash and cash equivalents

$    598.3

$ 1,014.6

 Accounts receivable, net

3,890.9

3,070.8

 Prepaid expenses and other assets

146.1

179.6

 Future income tax benefits

73.9

67.4

     Total current assets

4,709.2

4,332.4

Other assets:

 Goodwill and other intangible assets, net

1,758.0

1,357.5

 Other assets

374.6

347.5

     Total other assets

2,132.6

1,705.0

Property and equipment:

 Land, buildings, leasehold improvements and equipment

711.1

703.6

 Less:  accumulated depreciation and amortization

537.5

527.2

   Net property and equipment

173.6

176.4

       Total assets

$ 7,015.4

$ 6,213.8

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

 Accounts payable

$ 1,293.5

$    944.4

 Employee compensation payable

221.5

187.8

 Accrued liabilities

516.0

465.9

 Accrued payroll taxes and insurance

633.6

572.0

 Value added taxes payable

502.5

391.2

 Short-term borrowings and current maturities of long-term debt

24.6

41.7

     Total current liabilities

3,191.7

2,603.0

Other liabilities:

 Long-term debt

681.8

715.6

 Other long-term liabilities

376.3

358.7

     Total other liabilities

1,058.1

1,074.3

Shareholders' equity:

 Common stock

1.1

1.0

 Capital in excess of par value

2,765.1

2,544.2

 Retained earnings

1,165.8

1,109.6

 Accumulated other comprehensive income

94.4

106.9

 Treasury stock, at cost

(1,260.8)

(1,225.2)

     Total shareholders' equity

2,765.6

2,536.5

       Total liabilities and shareholders' equity

$ 7,015.4

$ 6,213.8

Manpower Inc.

Consolidated Statements of Cash Flows

(In millions)

Nine Months Ended

September 30

2010

2009

(Unaudited)

Cash Flows from Operating Activities:

 Net earnings (loss)

$    86.8

$    (38.3)

 Adjustments to reconcile net earnings (loss) to net

   cash provided by operating activities:

     Depreciation and amortization

80.2

72.8

     Non-cash goodwill and intangible asset impairment

-

61.0

     Deferred income taxes

(44.9)

(12.1)

     Provision for doubtful accounts

22.0

20.9

     Loss from sale of an equity investment

-

10.3

     Share-based compensation

17.9

12.5

     Excess tax benefit on exercise of stock options

(0.8)

(0.1)

 Changes in operating assets and liabilities, excluding

   the impact of acquisitions:

     Accounts receivable

(730.2)

655.2

     Other assets

17.9

(69.5)

     Other liabilities

494.7

(300.8)

           Cash (used in) provided by operating activities

(56.4)

411.9

Cash Flows from Investing Activities:

 Capital expenditures

(41.8)

(27.0)

 Acquisitions of businesses, net of cash acquired

(260.6)

(21.3)

 Proceeds from the sale of an equity investment

-

13.3

 Proceeds from the sale of property and equipment

3.1

3.3

           Cash used in investing activities

(299.3)

(31.7)

Cash Flows from Financing Activities:

 Net change in short-term borrowings

(19.5)

(25.1)

 Proceeds from long-term debt

1.4

146.4

 Repayments of long-term debt

(1.0)

(210.0)

 Proceeds from share-based awards

15.0

9.7

 Excess tax benefit on exercise of stock options

0.8

0.1

 Repurchases of common stock

(34.8)

-

 Dividends paid

(30.6)

(29.0)

           Cash used in financing activities

(68.7)

(107.9)

Effect of exchange rate changes on cash

8.1

54.3

Change in cash and cash equivalents

(416.3)

326.6

Cash and cash equivalents, beginning of period

1,014.6

874.0

Cash and cash equivalents, end of period

$  598.3

$ 1,200.6