Manpower Reports 4th Quarter and Full Year 2010 Results

Manpower Inc.

Results of Operations

(In millions, except per share data)

Three Months Ended December 31

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from services (a)

$ 5,209.6

$ 4,412.6

18.1%

22.1%

Cost of services

4,303.9

3,656.5

17.7%

21.8%

   Gross profit

905.7

756.1

19.8%

23.5%

Selling and administrative expenses,
  excluding impairment charges

819.5

713.3

14.9%

18.1%

Goodwill and intangible asset impairment charges (b)

428.8

-

N/A

N/A

   Selling and administrative expenses

1,248.3

713.3

75.0%

78.2%

   Operating (loss) profit

(342.6)

42.8

N/A

N/A

Interest and other expenses

10.0

12.6

-20.7%

   (Loss) earnings before income taxes

(352.6)

30.2

N/A

N/A

Provision for income taxes

(2.2)

1.1

N/A

   Net (loss) earnings

$  (350.4)

$      29.1

N/A

N/A

Net (loss) earnings per share - basic

$    (4.29)

$      0.37

N/A

Net (loss) earnings per share - diluted

$    (4.29)

$      0.37

N/A

N/A

Weighted average shares - basic

81.6

78.5

4.0%

Weighted average shares - diluted

81.6

79.7

2.5%

(a)  Revenues from services include fees received from our franchise offices of $6.4 million and $5.7 million for the three months ended December 31, 2010 and 2009, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $263.5 million and $213.4 million for the three months ended December 31, 2010 and 2009, respectively.

(b)  The goodwill and intangible asset impairment charges for the three months ended December 31, 2010 relate to our investments in Right Management and Jefferson Wells. The impact on net earnings is $384.3 million, or $4.70 per diluted share.

Manpower Inc.

Operating Unit Results

(In millions)

Three Months Ended December 31

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from Services: (a)

   Americas:

       United States  (b)

$    777.1

$    479.0

62.2%

62.2%

       Other Americas

347.8

283.9

22.5%

19.5%

1,124.9

762.9

47.5%

46.3%

   France

1,433.6

1,304.4

9.9%

19.5%

   EMEA:

       Italy

294.1

269.3

9.2%

18.8%

       Other EMEA

1,681.7

1,477.7

13.8%

19.2%

1,975.8

1,747.0

13.1%

19.1%

   Asia Pacific

588.3

468.7

25.5%

16.5%

   Right Management

87.0

129.6

-32.9%

-32.4%

$ 5,209.6

$ 4,412.6

18.1%

22.1%

Operating Unit Profit (Loss) (c):

   Americas:

       United States  (b)

$      14.1

$      (7.7)

N/A

N/A

       Other Americas

10.0

5.9

67.9%

63.9%

24.1

(1.8)

N/A

N/A

   France

12.0

5.0

138.0%

156.7%

   EMEA:

       Italy

15.8

11.1

43.2%

55.6%

       Other EMEA

65.8

26.5

146.9%

157.6%

81.6

37.6

116.5%

127.6%

   Asia Pacific

9.6

6.9

42.0%

32.4%

   Right Management

(16.8)

20.8

N/A

N/A

110.5

68.5

Corporate expenses

(30.8)

(20.8)

Goodwill and intangible asset impairment charges

(428.8)

-

Intangible asset amortization expense (c)

(11.2)

(4.9)

Reclassification of French business tax

17.7

-

     Operating (loss) profit

(342.6)

42.8

N/A

N/A

Interest and other expenses (d)

(10.0)

(12.6)

     (Loss) earnings before income taxes

$  (352.6)

$      30.2

(a)  During the fourth quarter of 2010, our segment reporting was realigned due to our Jefferson Wells business being combined with our Professional Finance and Accounting vertical within the United States. Accordingly, our former reportable segment, Jefferson Wells, is now reported within our United States operating segment as part of the Americas reportable segment.  All previously reported results have been restated to conform to the current year presentation.

(b)  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 $3.8 million and $3.1 million for the three months ended December 31, 2010 and 2009, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $165.0 million and $135.6 million for the three months ended December 31, 2010 and 2009, respectively.

(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

$      10.1

$      13.2

       Interest income

(2.0)

(2.4)

       Foreign exchange loss (gain)

0.8

(0.1)

       Miscellaneous expenses, net

1.1

1.9

$      10.0

$      12.6

Manpower Inc.

Results of Operations

(In millions, except per share data)

Year Ended December 31

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from services (a)

$ 18,866.5

$ 16,038.7

17.6%

19.2%

Cost of services

15,621.1

13,220.5

18.2%

19.8%

   Gross profit

3,245.4

2,818.2

15.2%

16.4%

Selling and administrative expenses,
  excluding impairment charges

2,938.6

2,715.5

8.2%

9.1%

Goodwill and intangible asset impairment charges (b)

428.8

61.0

602.9%

602.9%

   Selling and administrative expenses

3,367.4

2,776.5

21.3%

22.1%

   Operating (loss) profit

(122.0)

41.7

N/A

N/A

Interest and other expenses

43.2

64.6

-33.1%

   Loss before income taxes

(165.2)

(22.9)

N/A

N/A

Provision for income taxes

98.4

(13.7)

N/A

   Net loss

$    (263.6)

$        (9.2)

N/A

N/A

Net loss per share - basic

$      (3.26)

$      (0.12)

N/A

Net loss per share - diluted

$      (3.26)

$      (0.12)

N/A

N/A

Weighted average shares - basic

81.0

78.3

3.4%

Weighted average shares - diluted

81.0

78.3

3.4%

(a)  Revenues from services include fees received from our franchise offices of $23.6 million and $22.3 million for the years ended December 31, 2010 and 2009, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $968.0 million and $746.7 million for the years ended December 31, 2010 and 2009, respectively.

(b)  The goodwill and intangible asset impairment charges for the year ended December 31, 2010 relate to our investments in Right Management and Jefferson Wells. The goodwill impairment charge for the year ended December 31, 2009 relates to our investment in Jefferson Wells. The impact on net earnings is $384.3 million and $61.0 million, or $4.73 and $0.78 per diluted share, for the years ended December 31, 2010 and 2009, respectively.

Manpower Inc.

Operating Unit Results

(In millions)

Year Ended December 31

% Variance

Amount

Constant

2010

2009

Reported

Currency

(Unaudited)

Revenues from Services: (a)

   Americas:

       United States  (b)

$   2,783.4

$   1,786.0

55.8%

55.8%

       Other Americas

1,265.5

967.3

30.8%

24.4%

4,048.9

2,753.3

47.1%

44.8%

   France

5,208.6

4,675.5

11.4%

18.0%

   EMEA:

       Italy

1,044.2

950.8

9.8%

16.0%

       Other EMEA

6,043.0

5,371.7

12.5%

14.6%

7,087.2

6,322.5

12.1%

14.8%

   Asia Pacific

2,147.2

1,728.0

24.3%

14.5%

   Right Management

374.6

559.4

-33.0%

-33.8%

$ 18,866.5

$ 16,038.7

17.6%

19.2%

Operating Unit Profit (Loss) (c):

   Americas:

       United States  (b)

$        42.8

$      (41.4)

N/A

N/A

       Other Americas

36.5

20.1

81.4%

72.9%

79.3

(21.3)

N/A

N/A

   France

47.1

20.8

126.4%

150.1%

   EMEA:

       Italy

47.5

27.9

70.2%

82.1%

       Other EMEA

157.4

34.7

353.0%

368.0%

204.9

62.6

227.0%

240.7%

   Asia Pacific

47.2

26.5

78.4%

63.6%

   Right Management

3.5

113.4

-96.9%

-98.0%

382.0

202.0

Corporate expenses

(101.2)

(77.4)

Goodwill and intangible asset impairment charges

(428.8)

(61.0)

Intangible asset amortization expense (c)

(39.3)

(21.9)

Reclassification of French business tax

65.3

-

     Operating (loss) profit

(122.0)

41.7

N/A

N/A

Interest and other expenses (d)

(43.2)

(64.6)

     Loss before income taxes

$    (165.2)

$      (22.9)

(a)  During the fourth quarter of 2010, our segment reporting was realigned due to our Jefferson Wells business being combined with our Professional Finance and Accounting vertical within the United States. Accordingly, our former reportable segment, Jefferson Wells, is now reported within our United States operating segment as part of the Americas reportable segment.  All previously reported results have been restated to conform to the current year presentation.

(b)  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 $13.7 million and $10.5 million for the years ended December 31, 2010 and 2009, respectively.  These fees are primarily based on revenues generated by the franchise offices, which were $622.0 million and $459.3 million for the years ended December 31, 2010 and 2009, respectively.

(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

$        43.7

$        61.7

       Interest income

(6.2)

(11.7)

       Foreign exchange losses

3.3

0.8

       Miscellaneous expenses, net

2.4

3.5

       Loss from sale of an equity investment

-

10.3

$        43.2

$        64.6

Manpower Inc.

Consolidated Balance Sheets

(In millions)

Dec. 31

Dec. 31

2010

2009

(Unaudited)

ASSETS

Current assets:

   Cash and cash equivalents

$    772.6

$ 1,014.6

   Accounts receivable, net

3,844.1

3,070.8

   Prepaid expenses and other assets

197.6

179.6

   Future income tax benefits

59.7

67.4

       Total current assets

4,874.0

4,332.4

Other assets:

   Goodwill and other intangible assets, net

1,330.3

1,357.5

   Other assets

355.1

347.5

       Total other assets

1,685.4

1,705.0

Property and equipment:

   Land, buildings, leasehold improvements and equipment

688.8

703.6

   Less:  accumulated depreciation and amortization

518.5

527.2

     Net property and equipment

170.3

176.4

         Total assets

$ 6,729.7

$ 6,213.8

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

   Accounts payable

$ 1,313.9

$    944.4

   Employee compensation payable

240.2

187.8

   Accrued liabilities

547.4

465.9

   Accrued payroll taxes and insurance

677.7

572.0

   Value added taxes payable

482.2

391.2

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

28.7

41.7

       Total current liabilities

3,290.1

2,603.0

Other liabilities:

   Long-term debt

669.3

715.6

   Other long-term liabilities

373.1

358.7

       Total other liabilities

1,042.4

1,074.3

Shareholders' equity:

   Common stock

1.1

1.0

   Capital in excess of par value

2,781.7

2,544.2

   Retained earnings

785.2

1,109.6

   Accumulated other comprehensive income

87.0

106.9

   Treasury stock, at cost

(1,257.8)

(1,225.2)

       Total shareholders' equity

2,397.2

2,536.5

         Total liabilities and shareholders' equity

$ 6,729.7

$ 6,213.8

Manpower Inc.

Consolidated Statements of Cash Flows

(In millions)

Year Ended

December 31

2010

2009

(Unaudited)

Cash Flows from Operating Activities:

   Net loss

$ (263.6)

$      (9.2)

   Adjustments to reconcile net loss to net

     cash provided by operating activities:

       Depreciation and amortization

110.1

97.2

       Non-cash goodwill and intangible asset impairment

428.8

61.0

       Deferred income taxes

(68.5)

(29.2)

       Provision for doubtful accounts

28.9

27.8

       Loss from sale of an equity investment

-

10.3

       Share-based compensation

24.1

17.5

       Excess tax benefit on exercise of stock options

(1.3)

(0.5)

   Changes in operating assets and liabilities, excluding

     the impact of acquisitions:

       Accounts receivable

(708.1)

663.6

       Other assets

9.9

(71.5)

       Other liabilities

621.8

(352.7)

             Cash provided by operating activities

182.1

414.3

Cash Flows from Investing Activities:

   Capital expenditures

(58.5)

(35.1)

   Acquisitions of businesses, net of cash acquired

(270.0)

(21.6)

   Proceeds from sale of an equity investment

-

13.3

   Proceeds from sales of property and equipment

4.9

3.6

             Cash used in investing activities

(323.6)

(39.8)

Cash Flows from Financing Activities:

   Net change in short-term borrowings

(15.6)

(14.6)

   Proceeds from long-term debt

1.8

146.5

   Repayments of long-term debt

(1.1)

(359.3)

   Proceeds from share-based awards

27.1

14.2

   Excess tax benefit on exercise of stock options

1.3

0.5

   Repurchases of common stock

(34.8)

-

   Dividends paid

(60.8)

(58.0)

             Cash used in financing activities

(82.1)

(270.7)

Effect of exchange rate changes on cash

(18.4)

36.8

Change in cash and cash equivalents

(242.0)

140.6

Cash and cash equivalents, beginning of period

1,014.6

874.0

Cash and cash equivalents, end of period

$  772.6

$ 1,014.6