form10-k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
 
For the fiscal year ended December 31, 2009
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File No. 1-10686
 
MANPOWER INC.
(Exact name of registrant as specified in its charter)
   
WISCONSIN
39-1672779
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
   
100 MANPOWER PLACE
MILWAUKEE, WISCONSIN
53212
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (414) 961-1000
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of Exchange on which registered
Common Stock, $.01 par value
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes  x    No    ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):    Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
 
The aggregate market value of the voting stock held by nonaffiliates of the registrant was $3,317,445,824 as of June 30, 2009. As of February 16, 2010, there were 78,667,931 of the registrant’s shares of common stock outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Parts I and II incorporate information by reference from the Annual Report to Shareholders for the fiscal year ended December 31, 2009. Part III is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010.
 
 

 

PART I
 
The terms “Manpower,” “we,” “our,” “us,” or “the Company” refer to Manpower Inc. or Manpower Inc. and its consolidated subsidiaries, as appropriate in the context.
 
Item 1.
Business
 
Introduction and History
 
Manpower Inc. is a world leader in the employment services industry. Our global network of nearly 4,000 offices in 82 countries and territories allows us to meet the needs of our clients in all industry segments, whether they are global, multinational or local companies. By offering a complete range of services, we can help any company – no matter where they are in their business evolution – raise productivity through improved strategy, quality, efficiency and cost reduction across their total workforce.
 
Manpower Inc.’s five major brands – Manpower, Manpower Professional, Elan, Jefferson Wells and Right Management – provide a comprehensive range of services for the entire employment and business cycle including:
 
 
Permanent, temporary and contract recruitment – We find the best people for all types of jobs and industries at both the staff and professional levels under the Manpower, Manpower Professional and Elan brands.
 
 
Employee assessment and selection – We provide a wide array of assessments to validate candidate skills and ensure a good fit between the client and the employee, which leads to higher employee retention rates.
 
 
Training – We offer an extensive choice of training and development solutions that help our employees, associates and clients’ workforces to improve their skills and gain qualifications that will help them to succeed in the ever-changing world of work.
 
 
Outplacement – Our Right Management brand is the world’s leading outplacement provider, helping our clients to better manage the human side of change by providing a positive way for employees who are transitioning out to make the right choice for the next step in their career. The countercyclical nature of the outplacement industry helps strengthen our portfolio during down economic cycles.
 
 
Outsourcing – Under Manpower Business Solutions (MBS), we provide clients with outsourcing services related to human resources functions primarily in the areas of large-scale recruiting and workforce-intensive initiatives that are outcome based, thereby sharing in the risk and reward with our clients. Our solutions include: task outsourcing, vendor management, onsite HR services and Recruitment Process Outsourcing (RPO), where we are one of the largest providers of permanent and contingent recruitment in the world.
 
 
Consulting – We are a leading global provider of integrated consulting solutions across the employment lifecycle. We help clients maximize the return on their human capital investments while assisting individuals to achieve their full potential. Our Right Management brand helps clients attract and assess top talent; develop and grow leaders; and engage and align people with strategy.
 
 
Professional Services – Our Jefferson Wells brand is a high-value alternative to public accounting firms and other consulting groups, delivering professional services in the areas of risk advisory, tax, and finance and accounting.
 
This comprehensive and diverse business mix allows us to mitigate the cyclical effects of the national economies in which we operate.
 
 
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Our leadership position also allows us to be a center for quality employment opportunities for people at all points in their career paths. In 2009, we found permanent and temporary jobs for three million people who work to help our more than 400,000 clients meet their business objectives. Seasoned professionals, skilled laborers, mothers returning to work, elderly persons wanting to supplement pensions and disabled individuals – all turn to the Manpower group of companies for employment. Similarly, governments of the nations in which we operate look to us to help reduce unemployment and train the unemployed with skills they need to enter the workforce. In this way, our Company is a bridge to permanent employment for those who desire it.
 
We, and our predecessors, have been in business since 1948, with shares listed on the New York Stock Exchange since 1967.
 
Our Internet address is www.manpower.com. We make available through our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. In addition, we also make available through our Internet website:
 
 
our articles of incorporation and bylaws;
 
 
our Manpower Code of Business Conduct and Ethics;
 
 
our Corporate Governance Guidelines;
 
 
the charters of the Audit, Executive Compensation and Nominating and Governance Committees of the Board of Directors;
 
 
our guidelines for selecting board candidates;
 
 
our categorical standards for relationships deemed not to impair independence of non-employee directors;
 
 
our policy on services provided by independent auditors; and
 
 
our regular update on corporate social responsibility.
 
Documents available on the website are also available in print for any shareholder who requests them. Requests may be made by writing to Mr. Kenneth C. Hunt, Secretary, Manpower Inc., 100 Manpower Place, Milwaukee, Wisconsin 53212. We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Annual Report on Form 10-K.
 
Our Operations
 
Americas
 
In the Americas, our operations under the Manpower and Manpower Professional brands are carried out through both branch and franchise offices. The total Americas segment had 808 branch and 220 franchise offices.  In the U.S., where we earned 62% of the Americas’ revenue, we had 530 branch and 205 stand-alone franchise offices as of December 31, 2009, as well as on-site locations at clients with significant permanent, temporary and contract recruitment requirements. In Mexico and Central America, we had 92 branch offices and in the South American Region, we had 151 branch and 9 franchise offices.  We provide a number of central support services to our branches and franchises, which enable us to maintain consistent service quality throughout the region regardless of whether an office is a branch or franchise. In the U.S., we provide client invoicing and payroll processing of our contingent workers for all branch offices and some of our franchise offices through our Milwaukee headquarters.
 
 
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Our franchise agreements provide the franchisee with the right to use the Manpower® or Manpower Professional® service mark and associated marks in a specifically defined exclusive territory. In the United States, franchise fees range from 2-3% of franchise sales. Our franchise agreements provide that in the event of a proposed sale of a franchise to a third party, we have the right to repurchase the franchise at the same price and on the same terms as proposed by the third party. We exercise this right and intend to continue to do so in the future if opportunities arise with appropriate prices and terms.
 
In the Americas, our Manpower operations provide a variety of employment services, including permanent, temporary and contract recruitment, assessment and selection, training, managed service solutions and outsourcing. During 2009 in this segment, approximately 41% of temporary and contract recruitment revenues were derived from placing office staff, 41% from placing industrial staff and 18% from placing professional and technical staff. For our U.S. operations in 2009, approximately 29% of the temporary and contract recruitment revenues were derived from placing office staff, 51% from placing industrial staff and 20% from placing professional and technical staff.
 
We also conduct business in the Americas under our Jefferson Wells and Right Management brands. These operations are discussed further in the following sections.
 
France
 
We are a leading employment service provider in France, operating under the Manpower and Manpower Professional brands. We conduct our operations in France and the surrounding region through 855 branch offices under the name of Manpower and 98 branch offices under the name Supplay.
 
The employment services market in France calls for a wide range of our services including permanent, temporary and contract recruitment, assessment and selection, and training. The temporary recruitment market is predominately focused on recruitment for industrial positions. In 2009, we derived approximately 62% of our temporary recruitment revenues in France from the supply of industrial staff, 21% from the supply of construction workers and 17% from the supply of office staff.
 
          We also conduct business in France under our Jefferson Wells, Elan and Right Management brands. These operations are discussed further in the following sections.
 
EMEA (Europe, Middle East and Africa excluding France)
 
We are a leading provider of permanent, temporary and contract recruitment, assessment and selection, training and outsourcing services throughout Europe, the Middle East and Africa. Our largest operations are in Italy, Germany, the Netherlands, Norway, Spain, Sweden, and the United Kingdom. Collectively, we operate through 1,437 branch offices and 50 franchise offices in this region. Our franchise offices are located in Switzerland, where we own 49% of the franchise.
 
Manpower Italy, the largest operation in the EMEA segment, comprising 15% of EMEA revenues, is a leading employment services provider. As of December 31, 2009, Manpower Italy conducted operations under the Manpower and Manpower Professional brands through a network of 304 branch offices. It provides a comprehensive line of employment services including permanent, temporary and contract recruitment, assessment and selection, training and outsourcing. In 2009, approximately 5% of our temporary and contract recruitment revenues in Italy were derived from placing office staff, including contract center staff, 63% from placing industrial staff and 32% from placing professional and technical staff.
 
The second largest operation in this segment is Manpower U.K., comprising 11% of EMEA revenues.  Manpower U.K. is a leading provider of employment services in the United Kingdom. As of December 31, 2009, Manpower U.K. conducted operations in the United Kingdom under the Manpower and Manpower Professional brands through a network of 107 branch offices and also provided on-site services to clients who have significant permanent, temporary and contract recruitment requirements. During 2009, approximately 70% of Manpower U.K.’s temporary recruitment revenues were derived from the supply of office staff, 20% from the supply of industrial staff and 10% from the supply of technical staff.
 
 
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We also own Brook Street Bureau PLC, or Brook Street, which operates through a total of 114 branch offices, separate from the Manpower and Manpower Professional brands in the United Kingdom. Its core business is secretarial, office and light industrial recruitment. Brook Street operates as a local network of branches supported by a national head office and competes primarily with local or regional independents. Brook Street’s revenues are comprised of temporary and contract placements as well as permanent recruitment.
 
Also included in our EMEA operations is Elan, which is a leading IT and technical recruitment firm. In addition to IT and technical recruitment, Elan provides managed service solutions to clients, which enable them to recruit personnel efficiently and achieve ongoing cost savings. Elan provides services in 16 countries, with the largest operations in the United Kingdom.
 
During 2009 for our EMEA operations, approximately 31% of temporary and contract recruitment revenues were derived from placing office staff, 33% from placing industrial staff and 36% from placing professional and technical staff.
 
We also conduct business in EMEA under our Jefferson Wells and Right Management brands. These operations are discussed further in the following sections.
 
Asia Pacific
 
We operate under the Manpower and Manpower Professional brands through 202 branch offices in the Asia Pacific Region. The largest of these operations are located in Australia, China, India, Japan, and the Southeast Asia Region, all of which operate through branch offices. Our Asia Pacific operations provide a variety of employment services, including permanent, temporary and contract recruitment, assessment and selection, training and outsourcing. During 2009, approximately 69% of our Asia Pacific temporary and contract recruitment revenues were derived from placing office staff, 9% from placing industrial staff and 22% from placing professional and technical staff.
 
We also conduct business in Asia Pacific under our Jefferson Wells and Right Management brands. These operations are discussed further in the following sections.
 
Right Management
 
    Right Management is the talent and career management expert within Manpower and helps clients win by designing and executing workforce solutions that align talent strategy with business strategy. Our expertise spans Talent Assessment, Leader Development, Organizational Effectiveness, Employee Engagement, and Workforce Transition and Outplacement. Right Management has more than 300 service locations in 50 countries. Today we serve 80% of the Fortune 500 and over 70% of the Fortune Global 500 companies by helping them to grow talent, reduce costs, accelerate performance and realize their business goals.
 
    Right Management’s Career Management capability includes Outplacement, Career Decision, Redeployment and Career Development solutions, designed to strategically mobilize and size workforces to meet client needs, while minimizing turnover and maintaining productivity.

Right Management’s Talent Management capability includes: Talent Assessment solutions that provide assessment and actionable feedback on current talent, to forecast for future business needs; Leader Development solutions focused on creating organizational capacity through careful grooming of a client’s most promising leader talent; Organizational Effectiveness solutions that facilitate the integration and alignment of the business strategy with a workable talent management strategy; and Employee Engagement solutions that help organizations identify the levels of engagement present within a given workforce population, set benchmarks by which to evaluate the level of engagement, and analysis to enable managers to understand and leverage the drivers of employee engagement unique to their organizations.
 
 
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Jefferson Wells
 
    Jefferson Wells delivers professional services in the areas of risk advisory, tax, and finance and accounting.  Jefferson Wells’ Centers of Expertise offer in-depth expertise for specific processes, industries and technical issues, enabling the company to mobilize a global network of resources and services to address specialized client needs.  The company does not perform attestation work, and focuses on client needs to deliver independent, cost-effective results by providing solutions across a wide range of finance-related business functions.
 
    Jefferson Wells employs highly experienced professionals who have significant practical, hands-on experience — often a blend of public accounting and industry experience with relevant professional credentials and accreditations. Jefferson Wells’ professionals have extensive experience in a variety of industries, including: automotive, business services, communications, construction, education, energy and utilities, financial services, government, healthcare, hospitality, insurance, retail, technology and manufacturing.
 
    The company serves clients, including Fortune 500, FTSE 350 and Global 1000 companies.  Its mission has always been to provide exceptional service at competitive rates by putting resources into local offices, rather than a centralized, partner-based organization. This allows the company to keep their fees competitive, with experts available locally so travel and lodging expenses are nominal or non-existent. Jefferson Wells has operations in the United States, Canada, the United Kingdom, Germany, the Netherlands, South Africa and Hong Kong through 50 office locations.  In partnership with our business alliances, Jefferson Wells delivers services in more than 40 countries and markets worldwide.
 
Competition
 
Introduction
 
We compete in the employment services industry by offering a complete range of services, including permanent, temporary and contract recruitment, assessment and selection, training, managed service solutions, outsourcing, consulting and professional services.
 
            Our industry is large and fragmented, comprised of thousands of firms employing millions of people and generating billions of U.S. Dollars in annual revenues. It is also a highly competitive industry, reflecting several trends in the global marketplace such as the notably increasing demand for skilled people, employers’ desire for more flexible working models and consolidation among clients and in the employment services industry itself. We manage these trends by leveraging established strengths, including one of the employment services industry’s most recognized and respected brands; geographic diversification; size and service scope; an innovative product mix; and a strong client base. While staffing is an important aspect of our business, our strategy is focused on providing both the skilled employees our clients need and high-value workforce management, outsourcing and consulting solutions.
 
Client demand for employment services is dependent on the overall strength of the labor market and secular trends toward greater workforce flexibility within each of the countries and territories in which we operate. Improving economic growth typically results in increasing demand for labor, resulting in greater demand for our staffing services. Correspondingly, during periods of weak economic growth or economic contraction, the demand for our staffing services typically declines, while demand for our outplacement services typically accelerates.
 
During the last several years, secular trends toward greater workforce flexibility have had a favorable impact on demand for our services in several markets. As companies attempt to increase the variability of their cost base, the contemporary work solutions we provide help them to effectively address the fluctuating demand for their products or services. As the economy recovers, we believe employment services firms will play an increasing role in workforce strategy and talent acquisition due to the deep staff cuts many companies have made during the recession, particularly at large organizations.
 
 
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Our client mix consists of both small- and medium-size businesses, which are based upon a local or regional relationship with our office network in each market, and large national/multinational client relationships, which comprised approximately 44% of our revenues in 2009. These large national and multinational clients will frequently enter into non-exclusive arrangements with several firms, with the ultimate choice among them being left to the local managers. As a result, employment services firms with a large network of offices compete most effectively for this business which generally has agreed-upon pricing or mark-up on services performed. Client relationships with small- and medium-size businesses tend to rely less upon longer-term contracts, and the competitors for this business are primarily locally-owned businesses.
 
Recruitment Services Market
 
Our portfolio of recruitment services includes permanent, temporary and contract recruitment of professionals, as well as administrative and industrial positions. All of these services are provided under the Manpower, Manpower Professional and Elan brands.
 
We are preparing for the global expansion and acceleration of our Professional Staffing business, particularly in the areas of Information, Communications and Technology (ITC), Engineering, and Finance and Accounting. These high-growth, high-profitability services, delivered primarily under the Manpower Professional brand and Elan, provide the in-demand skills our clients require. Professional Staffing will be a critical revenue stream for us in the future, as we continue to build our brand and attract the talent our clients need as skills shortages rise.
 
Our recruitment services also include our Recruitment Process Outsourcing (RPO) offering, where we take on the management of customized, large-scale recruiting and workforce productivity initiatives for clients in an exclusive outsourcing contract. Our RPO offering is delivered via Manpower Business Solutions (MBS), a dedicated business unit within the Manpower group of companies that specializes in the delivery of customized employment strategies and outcome-based solutions. Through our RPO offering, MBS manages any part or all of a client's permanent recruiting and hiring processes, from job profiling to on-boarding, globally or in a single location. The Managed Service Program (MSP) and RPO offerings provide specialty expertise in contingent workforce management and broader administrative functions. MSP services include overall program management, reporting and tracking, supplier selection and management and order distribution. Business Process Outsourcing (BPO) services include management of financial and administrative processes, including call center and customer service activities and accounting and payroll. Our proven experience, process and digital and physical network allow us to drive the per hire cost savings down through an end-to-end recruitment process.
 
The temporary recruitment market throughout the world is large and highly fragmented with more than 15,000 firms competing throughout the world. In most areas, no single company has a dominant share of the temporary and contract recruitment market. In addition to us, the largest publicly owned companies specializing in recruitment services are Adecco, S.A. (Switzerland), Randstad Holding N.V. (Netherlands) and Kelly Services, Inc. (U.S.).
 
The global RPO market was approximately $1.9 billion in 2009 and is projected to grow to $2.8 billion by 2013. RPO accounts for approximately 4% of the overall Human Resource Outsourcing market.
 
Historically, in periods of economic prosperity, the number of firms providing recruitment services has increased significantly due to the combination of a favorable economic climate and low barriers to entry. Recessionary periods generally result in a reduction in the number of competitors through consolidation and closures; however, historically this reduction has proven to be for a limited time as the following periods of economic recovery have led to a return in growth in the number of competitors. As we projected, due to the difficult economic environment this year, we saw many of our smaller, local competitors struggle, with many national markets consolidating further. In many markets we were able to improve market share and we see further opportunity to do so in the future.
 
 
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Recruitment firms act as intermediaries in matching available permanent, temporary and contract workers to employer assignments. As a result, these firms compete both to recruit and retain a supply of permanent, temporary and contract workers and to attract clients to employ these workers. We recruit permanent, temporary and contract workers through a wide variety of means, including personal referrals, online resources and advertisements, and by providing an attractive compensation package in jurisdictions where such benefits are not otherwise required by law, including health insurance, vacation and holiday pay, incentive and pension plans and a recognition program.  
 
Methods used to market recruitment services to clients vary depending on the client’s need for permanent, temporary and RPO services, the local labor supply, the length of assignment and the number of workers required. Our full range of employment services and multiple brands enable us to cross-market to clients in order to leverage our relationships and expand our services provided, from outplacement services at Right Management to permanent recruitment services at Manpower Professional, to RPO services, etc. We compete by means of quality of service provided, scope of service offered, ability to source the right talent and price. Success in providing high quality recruitment services is a function of the ability to access a supply of available workers, select suitable individuals for a particular assignment and, in some cases, train available workers in skills required for an assignment. For MBS services, success is defined primarily by the ability to perform the recruitment function more effectively and efficiently than the client could perform those functions internally.
 
An important aspect in the selection of temporary and contract workers for an assignment is the ability of the recruitment firm to identify the skills, knowledge, abilities, and personal characteristics of a temporary worker and match their competencies or capabilities to an employer’s requirements. We have a variety of proprietary programs for identifying and assessing the skill level of our associates, which are used in selecting a particular individual for a specific assignment. We believe that our assessment systems enable us to offer a higher quality service by increasing productivity, decreasing turnover and reducing absenteeism.
 
It is also important to be able to access a large network of skilled workers and to be able to “create” certain hard-to-find skills by offering training to available workers. Our competitive position is enhanced by our ability to offer a wide variety of skills, in some of the most important market segments, through the use of training systems. Our Manpower Direct TrainingSM online university provides over 5,000 hours of online courses that are accessible 24/7 and are free to our employees and associates to help them improve their skills. The courses cover a wide range of subjects in many languages and feature the latest information for a variety of fields, from learning the latest technology in the IT field, to brushing up on business management courses or software programs. This training can also enable students in any profession to further develop their skills, improve their employability and earn higher wages.
 
Career and Talent Management Consulting Services Market
 
Our Career and Talent Management consulting services are primarily provided under the Right Management brand. Right Management is the talent and career management expert within Manpower. The organization helps clients win in the changing world of work by designing and executing workforce solutions that align talent strategy with business strategy. Its expertise spans talent assessment, leader development, organizational effectiveness, employee engagement, and workforce transition and outplacement. With offices in over 50 countries, Right Management partners with companies of all sizes. More than 80% of Fortune 500 companies are currently working with Right Management to help them grow talent, reduce costs and accelerate performance. The market for these consulting and outplacement services is highly competitive. In the market for services required by global clients, there are several barriers to entry, such as the global coverage, specialized local knowledge and technology required to provide outstanding services to corporations on a global scale.
 
    Our competitors in the consulting space related to Right Management's core capabilities include major firms that compete in serving the large employer worldwide, such as Mercer, Towers Watson, DDI and Hewitt Associates.  Additional significant competition comes from smaller regional and boutique firms in this same space, along with firms in related areas such as management and technology consulting and human resource IT that are starting to compete in portions of the Talent Management space (e.g. Accenture, Kenexa).  Public accounting and consulting firms such as PricewaterhouseCoopers and Deloitte & Touche are also competitors in this space, though these firms must provide their consulting services within the constraints of the auditor independence provisions of the Sarbanes-Oxley Act legislation.
 
 
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    Our competitors in the outplacement market include outplacement services firms such as Drake Beam Morin, Lee Hecht Harrison (owned by Adecco) and career service divisions of global employment services firms. Additionally, there are regional firms and numerous smaller boutiques operating in either limited geographic markets or providing limited services. Companies choose to provide outplacement services for several reasons. First, as the competition for attracting and retaining qualified employees increases, companies are increasingly attempting to distinguish themselves in the marketplace as attractive employers. Consequently, more companies are providing outplacement services as part of a comprehensive benefits package that provides for the well being of employees – not only during their period of employment, but also after their employment ceases. Additionally, when companies experience layoffs, many believe that providing outplacement services projects a positive corporate image and improves morale among the remaining employees. Finally, companies may provide outplacement services to reduce costs by preparing and assisting separated employees to find new employment, thereby diminishing employment-related litigation.
 
Companies augment their internal human resources professional staff with external consultants for many reasons. First, the growing importance and complexity of employee issues is creating an unprecedented theoretical and technical service expectation on human resources departments. Additionally, human resources departments have continued pressure to contain costs without minimizing the resources available to managers. Finally, companies increasingly choose to outsource non-core functions that can be addressed more effectively by outside professionals. These organizations look to Right Management for thought leadership and best practices on attracting and assessing organizational talent, leadership development and engaging and aligning the workforce.
 
Companies also choose Right Management for the high-tech, high-touch approach of our outplacement services and the range of expertise and solutions within our core capabilities that can be tailored to meet specific organizational and candidate needs. Our technology capabilities are integral to our services, particularly for outplacement.  We have made significant investments in technology to augment our core services with online, 24/7 access and support for both clients and candidates. Our solutions include: Right Navigator TM, RightChoice TM, RightTrack SM, RightEverywhereTM, Right Connection ®, Right FasTrack SM, Right Access SM , iView TM and Wellness and Productivity Management, along with Job Banks and Resume Banks.
 
Professional Services
 
Jefferson Wells competes in the professional services industry as a high-value alternative to public accounting firms and other consulting groups. It delivers professional services in the areas of risk advisory, tax, and finance and accounting, focusing on client needs to deliver independent, cost-effective results by providing solutions across a wide range of finance-related business functions.
 
The professional services industry is highly competitive and comprised of public accounting firms, mid-level consulting firms and specialty consulting boutique firms. The “Big Four” public accounting firms are Deloitte & Touche, Ernst & Young, PricewaterhouseCoopers and KPMG. Competitors in the professional services market include Protiviti, Grant Thornton, Huron Consulting and Resources Global Professionals. Additionally, numerous smaller boutiques either operate in limited geographic markets or provide limited services. While public accounting and consulting firms can be primary competitors, these firms also frequently refer Jefferson Wells to assist clients with engagements where there are conflict-of-interest concerns. Because Jefferson Wells does not perform attestation work, it can provide an objective review of a client’s business processes, thus avoiding potential conflicts of interest.
 
    Jefferson Wells employs highly experienced professionals who have significant practical, hands-on experience — often a blend of public accounting and industry experience with relevant professional credentials and accreditations. Jefferson Wells’ professionals have extensive experience in a variety of industries, including: automotive, business services, communications, construction, education, energy and utilities, financial services, government, healthcare, hospitality, insurance, retail, technology and manufacturing.
 
 
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In an evolving global marketplace, a variety of market trends affect the professional services industry, primary among them are: increasing demand for highly experienced people, global business expansion with a need for consistent methodology and service delivery, and the high cost of full-time professionals with specialized skills. To meet these demands, Jefferson Wells’ Centers of Expertise offer in-depth expertise for specific processes, industries and technical issues, enabling the company to mobilize a global network of resources and services to address specialized client needs. Its operational model seeks to provide exceptional service at competitive rates by putting resources into local offices, rather than a centralized, partner-based organization. This allows the company to keep its fees competitive, with experts available locally so travel and lodging expenses are nominal or non-existent.
 
Jefferson Wells serves clients, including Fortune 500, FTSE 350 and Global 1000 companies, via its network of 50 offices in the United States, Canada, England, Germany, The Netherlands, South Africa and Hong Kong. Its services are also delivered in more than 40 countries and markets worldwide through select business alliances.
 
Regulation
 
The employment services industry is closely regulated in all of the major markets in which we operate, except the United States and Canada. Employment services firms are generally subject to one or more of the following types of government regulation:
 
 
regulation of the employer/employee relationship between the firm and its temporary and contract employees;
 
 
registration, licensing, record keeping and reporting requirements; and
 
 
substantive limitations on the operations or the use of temporary and contract employees by clients.
 
In many markets, the existence or absence of collective bargaining agreements with labor organizations has a significant impact on our operations and the ability of clients to use our services. In some markets, labor agreements are structured on an industry-wide, rather than company-by-company, basis. Changes in these collective bargaining agreements have occurred in the past and are expected to occur in the future and may have a material impact on the operations of employment services firms, including us.
 
In many countries, including the United States and the United Kingdom, employment services firms are considered the legal employers of temporary and contract workers. Therefore, laws regulating the employer/employee relationship, such as tax withholding or reporting, social security or retirement, anti-discrimination and workers’ compensation, govern the firm. In other countries, employment services firms, while not the direct legal employer of temporary and contract workers, are still responsible for collecting taxes and social security deductions and transmitting such amounts to the taxing authorities.
 
In many countries, particularly in continental Europe and Asia, entry into the employment services market is restricted by the requirement to register with, or obtain licenses from, a government agency. In addition, a wide variety of ministerial requirements may be imposed, such as record keeping, written contracts and reporting. The United States and Canada do not presently have any form of national registration or licensing requirement.
 
In addition to licensing or registration requirements, many countries impose substantive restrictions on the use of temporary and contract workers. Such restrictions include regulations affecting the types of work permitted, the maximum length of assignment, wage levels or reasons for which temporary and contract workers may be employed. In some countries special taxes, fees or costs are imposed in connection with the use of temporary and contract workers. For example, temporary and contract workers in France are entitled to a 10% allowance for the uncertain duration of employment, which is eliminated if a full-time position is offered to them within three days after assignment termination. In some countries, the contract of employment with temporary and contract employees must differ from the length of assignment.
 
 
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Our outplacement and consulting services generally are not subjected to governmental regulation in the markets in which we operate.
 
In the United States, we are subject to various federal and state laws relating to franchising, principally the Federal Trade Commission’s Franchise Rules and analogous state laws which impact our agreements with our franchised operations. These laws and related rules and regulations impose specific disclosure requirements. Virtually all states also regulate the termination of franchises.
 
Also see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Legal Regulations.”
 
Trademarks
 
We maintain a number of registered trademarks, trade names and service marks in the United States and various other countries. We believe that many of these marks and trade names, including Manpower®, Manpower Professional®, Right Management Consultants®, Jefferson Wells®, Brook Street®, Elan®, Ultraskill®, and Skillware®, have significant value and are materially important to our business. In addition, we maintain other intangible property rights. The trademarks have been assigned an indefinite life based on our expectation of renewing the trademarks, as required, without material modifications and at a minimal cost, and our expectation of positive cash flows beyond the foreseeable future.

Employees
 
We had approximately 28,000 full-time equivalent employees as of December 31, 2009. In addition, we estimate that we recruit on behalf of our clients approximately three million permanent, temporary and contract workers on a worldwide basis each year.
 
As described above, in most jurisdictions, we, as the employer of our temporary and contract workers or as otherwise required by applicable law, are responsible for employment administration. This administration includes collection of withholding taxes, employer contributions for social security or its equivalent outside the United States, unemployment tax, workers’ compensation and fidelity and liability insurance, and other governmental requirements imposed on employers. In most jurisdictions where such benefits are not legally required, including the United States, we provide health and life insurance, paid holidays and paid vacations to qualifying temporary and contract employees.
 
Financial Information about Foreign and Domestic Operations
 
Note 15 to our consolidated financial statements sets forth the information required for each segment and geographical area for the years ended December 31, 2009, 2008 and 2007. Such note is found in our 2009 Annual Report to Shareholders and is incorporated herein by reference.

 
11

 
Item 1A.
Risk Factors
 
FORWARD-LOOKING STATEMENTS
 
Statements made in this report that are not statements of historical fact are forward-looking statements. In addition, from time to time, we and our representatives may make statements that are forward-looking. All forward-looking statements involve risks and uncertainties. This section provides you with cautionary statements identifying, for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, important factors that could cause our actual results to differ materially from those contained in forward-looking statements made in this report or otherwise made by us or on our behalf. You can identify these forward-looking statements by forward-looking words such as “expect”, “anticipate”, “intend”, “plan”, “may”, “will”, “believe”, “seek”, “estimate”, and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements.
 
The following are some of the factors that could cause actual results to differ materially from estimates contained in our forward-looking statements:
 
 
cost structure of subsidiaries;
 
 
management turnover;
 
 
reorganizations;
 
 
material changes in the demand from larger clients, including clients with which we have national, multi-national, or sole-supplier arrangements;
 
 
availability of workers with the skills required by clients;
 
 
increases in the wages paid to our associates;
 
 
competitive market pressures, including pricing pressures;
 
 
inability to pass along direct cost increases to clients;
 
 
changes in demand for our specialized services, including assisting companies in complying with the Sarbanes-Oxley Act legislation, and outplacement services;
 
 
12

 
 
our ability to successfully expand into new markets or offer new service lines;
 
 
our ability to successfully invest in and implement information systems;
 
 
unanticipated technological changes, including obsolescence or impairment of information systems;
 
 
changes in client attitudes toward the use of staffing services;
 
 
government, tax or regulatory policies adverse to the employment services industry;
 
 
general economic conditions in domestic and international markets;
 
 
interest rate and exchange rate fluctuations;
 
 
difficulties related to acquisitions, including integrating the acquired companies and achieving the expected benefits;
 
 
impairments to the carrying value of acquisitions and other investments resulting from poor financial performance or other factors;
 
 
the risk factors disclosed below; and
 
 
other factors that may be disclosed from time to time in our SEC filings or otherwise.
 
Some or all of these factors may be beyond our control. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made.
 

 
13

 

RISK FACTORS
 
Any significant economic downturn could result in our clients using fewer temporary and contract workers or becoming unable to pay us for our services on a timely basis or at all, which would materially adversely affect our business.
 
Because demand for recruitment services is sensitive to changes in the level of economic activity, our business may suffer during economic downturns. As economic activity begins to slow down, companies tend to reduce their use of temporary and contract workers before undertaking layoffs of their regular employees, resulting in decreased demand for temporary and contract workers. Significant declines in demand, and thus in revenues, can result in expense de-leveraging, which would result in lower profit levels.
 
In addition, during economic downturns companies may slow the rate at which they pay their vendors or become unable to pay their debts as they become due.  If any of our significant clients does not pay amounts owed to us in a timely manner or becomes unable to pay such amounts to us at a time when we have substantial amounts receivable from such client, our cash flow and profitability may suffer.
 
The worldwide employment services industry is highly competitive with limited barriers to entry, which could limit our ability to maintain or increase our market share or profitability.
 
The worldwide employment services market is highly competitive with limited barriers to entry, and in recent years has been undergoing significant consolidation. We compete in markets throughout the world with full-service and specialized employment services agencies. Several of our competitors, including Adecco S.A., Randstad Holding N.V. and Kelly Services, Inc., have very substantial marketing and financial resources. Price competition in the staffing industry is intense and pricing pressures from competitors and clients are increasing. We expect that the level of competition will remain high in the future, which could limit our ability to maintain or increase our market share or our profitability.
 
Government regulations may result in prohibition or restriction of certain types of employment services or the imposition of additional licensing or tax requirements that may reduce our future earnings.
 
In many jurisdictions in which we operate, such as France and Germany, the employment services industry is heavily regulated. For example, governmental regulations in Germany restrict the length of contracts and the industries in which our associates may be used. In some countries, special taxes, fees or costs are imposed in connection with the use of our associates. For example, our associates in France are entitled to a 10% allowance for the uncertain duration of employment, which is eliminated if a full-time position is offered to them within three days after assignment termination. The countries in which we operate may, among other things:
 
 
 
create additional regulations that prohibit or restrict the types of employment services that we currently provide;

 
 
require new or additional benefits be paid to our associates;

 
 
require us to obtain additional licensing to provide employment services; or

 
 
increase taxes, such as sales or value-added taxes, payable by the providers of temporary and contract recruitment centers.
 
Any future regulations may have a material adverse effect on our financial condition, results of operations and liquidity because they may make it more difficult or expensive for us to continue to provide employment services.
 
Our acquisition strategy may have a material adverse effect on our business due to unexpected or underestimated costs.
 
From time to time, we acquire and invest in companies throughout the world, including franchises.  The total cash consideration paid for acquisitions, net of cash acquired, was $21.6 million and $242.0 million in 2009 and 2008, respectively.

 
14

 

 
In February 2010, we entered into an agreement to acquire COMSYS IT Partners, Inc. (NASDAQ: CITP), a leading professional staffing firm. The agreement has been approved by the boards of directors of both companies. Subject to the terms of the agreement, the value of the consideration for each outstanding share of COMSYS common stock would be $17.65, for a total enterprise value of $431.0 million, including net debt retired by us at closing. The consideration is expected to be approximately 50% Manpower common stock and approximately 50% cash, unless we elect to pay all cash. The acquisition is expected to close in the second quarter of 2010.
 
We may make additional acquisitions in the future. Our acquisition strategy involves significant risks, including:
 
 
 
difficulties in the assimilation of the operations, services and corporate culture of acquired companies;

 
 
over-valuation by us of acquired companies;

 
 
insufficient indemnification from the selling parties for legal liabilities incurred by the acquired companies prior to the acquisitions; and

 
 
diversion of management’s attention from other business concerns.
 
These risks could have a material adverse effect on our business because they may result in substantial costs to us and disrupt our business. In addition, future acquisitions could materially adversely effect our business, financial condition, results of operations and liquidity because they would likely result in the incurrence of additional debt or dilution, contingent liabilities, an increase in interest expense and amortization expenses related to separately identified intangible assets. Possible impairment losses on goodwill and intangible assets with an indefinite life, or restructuring charges could also occur.  For example, we recorded a goodwill and intangible asset impairment charge of $61.0 million in 2009 and $163.1 million in 2008 related to our acquisitions of Jefferson Wells and Right Management, respectively.
 
Intense competition may limit our ability to attract, train and retain the qualified personnel necessary for us to meet our clients’ staffing needs.
 
We depend on our ability to attract and retain qualified associates who possess the skills and experience necessary to meet the requirements of our clients. We must continually evaluate and upgrade our base of available qualified personnel through recruiting and training programs to keep pace with changing client needs and emerging technologies. Competition for individuals with proven professional skills, particularly employees with accounting and technological skills, is intense, and we expect demand for such individuals to remain very strong for the foreseeable future. Qualified personnel may not be available to us in sufficient numbers and on terms of employment acceptable to us. Developing and implementing training programs requires significant expenditures and may not result in the trainees developing effective or adequate skills. We may not be able to develop training programs to respond to our clients’ changing needs or retain associates who we have trained. The failure to recruit, train and retain qualified associates could materially adversely affect our business because it may result in an inability to meet our clients’ needs.

 
15

 
We may be exposed to employment-related claims and costs from clients or third parties that could materially adversely affect our business, financial condition and results of operations.
 
We are in the business of employing people and placing them in the workplaces of other businesses. Risks relating to these activities include:
 
 
 
claims arising out of the actions or inactions of our associates, including matters for which we may have indemnified a client;

 
 
claims by our associates of discrimination or harassment directed at them, including claims relating to actions of our clients;

 
 
claims related to the employment of illegal aliens or unlicensed personnel;

 
 
payment of workers’ compensation claims and other similar claims;

 
 
violations of wage and hour requirements;

 
 
retroactive entitlement to employee benefits;

 
 
errors and omissions of our associates, particularly in the case of professionals, such as accountants; and

 
 
claims by our clients relating to our associates’ misuse of clients’ proprietary information, misappropriation of funds, other criminal activity or torts or other similar claims.
 
We may incur fines and other losses or negative publicity with respect to these problems. In addition, some or all of these claims may give rise to litigation, which could be time-consuming to our management team and costly and could have a negative impact on our business. We cannot be certain we will not experience these problems in the future.
 
We cannot be certain our insurance will be sufficient in amount or scope to cover all claims that may be asserted against us. Should the ultimate judgments or settlements exceed our insurance coverage, they could have a material effect on our results of operations, financial position and cash flows. We cannot be certain we will be able to obtain appropriate types or levels of insurance in the future, that adequate replacement policies will be available on acceptable terms, if at all, or that the companies from which we have obtained insurance will be able to pay claims we make under such policies.

If we lose our key personnel, then our business may suffer.
 
Our operations are dependent on the continued efforts of our officers and executive management and the performance and productivity of our local managers and field personnel. Our ability to attract and retain business is significantly affected by local relationships and the quality of service rendered. The loss of those key officers and members of management who have acquired significant experience in operating an employment services company on an international level may cause a significant disruption to our business. Moreover, the loss of our key managers and field personnel may jeopardize existing client relationships with businesses that continue to use our services based upon past relationships with these local managers and field personnel. The loss of such key personnel could materially adversely affect our operations, because it may result in an inability to establish and maintain client relationships and otherwise operate our business.

 
16

 
Foreign currency fluctuations may have a material adverse effect on our operating results.
 
We conduct our operations in 82 countries and territories and the results of our local operations are reported in the applicable foreign currencies and then translated into U.S. Dollars at the applicable foreign currency exchange rates for inclusion in our consolidated financial statements. During 2009, approximately 87% of our revenues were generated outside of the United States, the majority of which were generated in Europe. Furthermore, approximately $756.9 million of our outstanding indebtedness as of December 31, 2009 was denominated in foreign currencies. Because of devaluations and fluctuations in currency exchange rates or the imposition of limitations on conversion of foreign currencies into U.S. Dollars, we are subject to currency translation exposure on the profits of our operations, in addition to economic exposure. This exposure could have a material adverse effect on our business, financial condition, cash flow and results of operations in the future because, among other things, it could cause our reported revenues and profitability to decline or debt levels and interest expense to increase.

As of December 31, 2009 and 2008, we had $757.3 million and $952.9 million of total debt, respectively. This level of debt could adversely affect our operating flexibility and put us at a competitive disadvantage.
 
Our level of debt and the limitations imposed on us by our credit agreements could have important consequences for investors, including the following:
 
 
 
we will have to use a portion of our cash flow from operations for debt service rather than for our operations;

 
 
we may not be able to obtain additional debt financing for future working capital, capital expenditures or other corporate purposes or may have to pay more for such financing;

 
 
some or all of the debt under our current or future revolving credit facilities may be at a variable interest rate, making us more vulnerable to increases in interest rates;

 
 
we could be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions;

 
 
we will be more vulnerable to general adverse economic and industry conditions; and

 
 
we may be disadvantaged compared to competitors with less leverage.
 
The terms of our revolving credit facility permit additional borrowings, subject to certain conditions. If new debt is added to our current debt levels, the related risks we now face could intensify.
 
We expect to obtain the money to pay our expenses, to repay borrowings under our credit facility and to repay our other debt primarily from our operations. Our ability to meet our expenses thus depends on our future performance, which will be affected by financial, business, economic and other factors. We are not able to control many of these factors, such as economic conditions in the markets where we operate and pressure from competitors. The money we earn may not be sufficient to allow us to pay principal and interest on our debt and to meet our other debt obligations. If we do not have enough money, we may be required to refinance all or part of our existing debt, sell assets or borrow additional funds. We may not be able to take such actions on terms that are acceptable to us, if at all. In addition, the terms of our existing or future debt agreements, including the revolving credit facilities and our indentures, may restrict us from adopting any of these alternatives.
 
 
17

 
Our failure to comply with restrictive covenants under our revolving credit facilities and other debt instruments could trigger prepayment obligations.
 
Our failure to comply with the restrictive covenants under our revolving credit facilities and other debt instruments could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms, our results of operations and financial condition could be adversely affected by increased costs and rates.

The lenders under our and our subsidiaries’ credit facilities may be unwilling or unable to extend credit to us on acceptable terms or at all.
 
Our liquidity is dependent in part on our revolving credit facility, which is provided by a syndicate of banks.  Each bank in the syndicate is responsible on a several, but not joint, basis for providing a portion of the loans under the facility.  If any of the participants in the syndicate fails to satisfy its obligations to extend credit under the facility, the other participants refuse or are unable to assume its obligations and we are unable to find an alternative source of funding at comparable rates, our liquidity may be adversely affected or our interest expense may increase substantially.

Furthermore, a number of our subsidiaries maintain uncommitted lines of credit with various banks.  Under the terms of these lines of credit, the bank is not obligated to make loans to the subsidiary or to make loans to the subsidiary at a particular interest rate.  If any of these banks cancel these lines of credit or otherwise refuse to extend credit on acceptable terms, we may need to extend credit to those subsidiaries or the liquidity of our subsidiaries may be adversely affected.

The performance of our subsidiaries and their ability to distribute cash to our parent company may vary, negatively affecting our ability to service our debt at the parent company level or in other subsidiaries.
 
Since we conduct a significant portion of our operations through our subsidiaries, our cash flow and our consequent ability to service our debt depends in part upon the earnings of our subsidiaries and the distribution of those earnings to our parent company, or upon loans or other payments of funds by those subsidiaries to our parent company or to other subsidiaries. The payment of such dividends and the making of such loans and advances by our subsidiaries may be subject to legal or contractual restrictions, depend upon the earnings of those subsidiaries and be subject to various business considerations, including the ability of such subsidiaries to pay such dividends or make such loans and advances in a manner that does not result in substantial tax liability.

We are exposed to counterparty risk in our hedging arrangements.
 
From time to time we enter into arrangements with other parties to hedge our exposure to fluctuations in currency and interest rates, including forward contracts and swap agreements. A number of financial institutions similar to those that serve as counterparties to our hedging arrangements have been adversely affected by the global credit crisis and in some cases have been unable to fulfill their debts and other obligations.  If any of the counterparties to our hedging arrangements become unable to fulfill their obligations to us, we may lose the financial benefits of these arrangements. The fair value of our derivative financial instruments related to foreign currency forward exchange contracts reflected in our consolidated balance sheets as of December 31, 2009 were assets of $0.4 million and liabilities of $0.9 million.  We had no swap agreements outstanding as of December 31, 2009.
 
Our inability to secure letters of credit on acceptable terms may substantially increase our cost of doing business in various countries.
 
In a number of countries in which we conduct business we are obligated to provide guarantees or letters of credit to secure licenses, lease space or for insurance coverage.  We typically receive these guarantees and letters of credits from a number of financial institutions around the world.  In the event that we are unable to secure these arrangements from a bank, lender or other third party on acceptable terms, our liquidity may be adversely affected, there could be a disruption to our business or there could be a substantial increase in cost for our business.

 
18

 
The price of our common stock may fluctuate significantly, which may result in losses for investors.
 
The market price for our common stock has been and may continue to be volatile. For example, during 2009, the prices of our common stock as reported on the New York Stock Exchange ranged from a high of $61.48 to a low of $23.75. Our stock price can fluctuate as a result of a variety of factors, including factors listed in these “Risk Factors” and others, many of which are beyond our control. These factors include:
 
 
 
actual or anticipated variations in our quarterly operating results;

 
 
announcement of new services by us or our competitors;

 
 
announcements relating to strategic relationships or acquisitions;

 
 
changes in financial estimates or other statements by securities analysts; and

 
 
changes in general economic conditions such as the current credit environment.
 
Because of this volatility, we may fail to meet the expectations of our shareholders or of securities analysts, and our stock price could decline as a result.

Wisconsin law and our articles of incorporation and bylaws contain provisions that could make the takeover of our company more difficult.
 
Certain provisions of Wisconsin law and our articles of incorporation and bylaws could have the effect of delaying or preventing a third party from acquiring us, even if a change in control would be beneficial to our shareholders. These provisions of our articles of incorporation and bylaws include:
 
 
 
providing for a classified board of directors with staggered, three-year terms;

 
 
permitting removal of directors only for cause;

 
 
providing that vacancies on the board of directors will be filled by the remaining directors then in office; and

 
 
requiring advance notice for shareholder proposals and director nominees.
 
In addition, the Wisconsin control share acquisition statute and Wisconsin’s “fair price” and “business combination” provisions limit the ability of an acquiring person to engage in certain transactions or to exercise the full voting power of acquired shares under certain circumstances. These provisions and other provisions of Wisconsin law could make it more difficult for a third party to acquire us, even if doing so would benefit our shareholders. As a result, offers to acquire us, which may represent a premium over the available market price of our common stock, may be withdrawn or otherwise fail to be realized. The provisions described above could cause our stock price to decline.

 
19

 
    Improper disclosure of employee and client data could result in liability and harm our reputation.
 
Our business involves the use, storage and transmission of information about our employees, our clients and employees of our clients.  We and our third party service providers have established policies and procedures to help protect the security and privacy of this information.  It is possible that our security controls over personal and other data and other practices we and our third party service providers follow may not prevent the improper access to or disclosure of personally identifiable or otherwise confidential information.  Such disclosure could harm our reputation and subject us to liability under our contracts and laws that protect personal data and confidential information, resulting in increased costs or loss of revenue.  Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions and countries in which we provide services.  Our failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace.

Outsourcing certain aspects of our business could result in disruption and increased costs.
 
We have outsourced certain aspects of our business to third party vendors that subject us to risks, including disruptions in our business and increased costs. For example, we have engaged third parties to host and manage certain aspects of our data center information and technology infrastructure and to provide certain back office support in several countries. Accordingly, we are subject to the risks associated with the vendor’s ability to provide these services to meet our needs. Our operations will depend significantly upon their and our ability to make our servers, software applications and websites available and to protect our data from damage or interruption from human error, computer viruses, intentional acts of vandalism, labor disputes, natural disasters and similar events. If the cost of these services is more than expected, or if the vendor or we are unable to adequately protect our data and information is lost, or our ability to deliver our services is interrupted, then our business and results of operations may be negatively impacted.
 
Item 1B.
Unresolved Staff Comments
 
Not applicable.
 
Item 2.
Properties
 
We own properties at various locations worldwide, none of which are material. Most of our operations are conducted from leased premises and we do not anticipate any difficulty in renewing these leases or in finding alternative sites in the ordinary course of business.
 
Item 3.
Legal Proceedings
 
We are involved in litigation of a routine nature and various legal matters, which are being defended and handled in the ordinary course of business.
 
The information required by this Item is set forth in our Annual Report to Shareholders for the fiscal year ended December 31, 2009, under the heading “Significant Matters Affecting Results of Operations” (pages 36 to 39), which information is hereby incorporated herein by reference.
 
Item 4.
Submission of Matters to a Vote of Security Holders
 
Not applicable.

 
20

 
EXECUTIVE OFFICERS OF MANPOWER
(as of February 16, 2010)
Name of Officer
Office
Jeffrey A. Joerres
Age 50
Chairman of Manpower since May 2001, and President and Chief Executive Officer of Manpower since April 1999. Senior Vice President – European Operations and Marketing and Major Account Development of Manpower from July 1998 to April 1999. A director of Artisan Funds, Inc. and Johnson Controls, Inc. A director of Manpower for more than five years. An employee of Manpower since July 1993.
   
Michael J. Van Handel
Age 50
Executive Vice President, Chief Financial Officer of Manpower since January 2008. Executive Vice President, Chief Financial Officer and Secretary of Manpower from April 2002 to January 2008. Senior Vice President, Chief Financial Officer and Secretary of Manpower from August 1999 to April 2002. Senior Vice President, Chief Financial Officer, Treasurer and Secretary of Manpower from July 1998 to August 1999. An employee of Manpower since May 1989.
   
Barbara J. Beck
Age 49
Executive Vice President of Manpower, President – Europe, Middle East and Africa since January 2006. A director of Ecolab Inc. since February 2008. Executive Vice President of Manpower – United States and Canadian Operations from January 2002 to December 2005. Independent consultant from August 2000 to January 2002. Area Vice President and General Manager of United States – West for Sprint Corporation from February 1996 to August 2000. An employee of Manpower since January 2002.
   
Jonas Prising
Age 44
Executive Vice President of Manpower, President – The Americas of Manpower since January 2009. Executive Vice President of Manpower, President – United States and Canadian Operations from January 2006 to December 2008. Managing Director of Manpower Italy from July 2002 to December 2005. Director of Manpower Global Accounts – EMEA from June 1999 to June 2002. Prior to joining Manpower, held multiple international management positions with Electrolux from 1989 to May 1999. An employee of Manpower since June 1999.
   
Owen J. Sullivan
Age 52
Executive Vice President of Manpower, and Chief Executive Officer of Right Management and Jefferson Wells since January 2005. Chief Executive Officer of Jefferson Wells International, Inc. from April 2003 to January 2005. Independent consultant from 2002 to 2003. President of the Financial Services Group – Metavante Corporation from 1999 to 2003. An employee of Manpower since April 2003.
   
Francoise Gri
Age 52
Executive Vice President of Manpower, President – France since February 2007. Prior to joining Manpower, held various leadership roles with IBM from 1981 to February 2007 including: regional general manager of France, Belgium and Luxembourg; vice president of marketing and channels software for IBM EMEA; and executive of
e-business solutions for IBM EMEA. An employee of Manpower since February 2007.
   
Darryl Green
Age 49
 
Executive Vice President of Manpower, President –Asia-Pacific and Middle East Operations since January 2009.  Executive Vice President of Manpower, President – Asia-Pacific Operations from May 2007 to December 2008.  Prior to joining Manpower, served as CEO of Tata Teleservices. Previously, CEO of Vodafone Japan, a publicly listed mobile services provider. From 1989 to 1998, held various management positions within AT&T, including three years as President and CEO of its Japanese operations. An employee of Manpower since May 2007.
   
Mara E. Swan
Age 50
Executive Vice President - Global Strategy and Talent since January 2009.  Senior Vice President of Global Human Resources from August 2005 to December 2008.  Prior to Manpower, served as Chief People Officer for the Molson Coors Brewing Company for its global operations. Previously, Human Resources Manager for Miller Brewing Company. An employee of Manpower since August 2005.
   
Kenneth C. Hunt
Age 60
Senior Vice President, General Counsel and Secretary of Manpower since January 2008. Prior to joining Manpower, a shareholder with the law firm of Godfrey & Kahn, S.C. from 1981 to 2007. An employee of Manpower since January 2008.

 
21

 
OTHER INFORMATION
 
Audit Committee Approval of Audit-Related and Non-Audit Services
 
The Audit Committee of our Board of Directors has approved the following audit-related and non-audit services performed or to be performed for us by our independent registered public accounting firm, Deloitte & Touche LLP, in 2009:
 
(a)  
preparation and/or review of tax returns, including sales and use tax, excise tax, income tax, local tax, property tax, and value-added tax;

(b)  
consultation regarding appropriate handling of items on tax returns, required disclosures, elections and filing positions available to us;

(c)  
assistance with tax audits and examinations, including providing technical advice on technical interpretations, applicable laws and regulations, tax accounting, foreign tax credits, foreign income tax, foreign earnings and profits, U.S. treatment of foreign subsidiary income, and value-added tax, excise tax or equivalent taxes in foreign jurisdictions;

(d)  
advice and assistance with respect to transfer pricing matters, including the preparation of reports used by us to comply with taxing authority documentation requirements regarding royalties and inter-company pricing, and assistance with tax exemptions;

(e)  
consultation on various projects;

(f)  
advice regarding tax issues relating to our internal reorganizations;

(g)  
assistance with due diligence work;

(h)  
assistance with SEC comment letters;

(i)  
training for our internal audit and tax staffs;

(j)  
reviews of our quarterly financial statements; and

(k)  
assistance relating to reporting under and compliance with the federal securities laws and the rules and regulations promulgated thereunder, including the issuance of a consent.

 
22

 
PART II
 
Item 5.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
 
In August 2007, the Board of Directors authorized the repurchase of 5.0 million shares of our common stock, not to exceed a total purchase price of $400.0 million. The authorization permitted share repurchases from time to time through a variety of methods, including open market purchases, block transactions, privately negotiated transactions, accelerated share repurchase programs, forward repurchase agreements or similar facilities. The following table shows the total amount of shares repurchased under this authorization during the fourth quarter of 2009.
                   
ISSUER PURCHASES OF EQUITY SECURITIES
 
 
  
Total number of
shares purchased
  
Average
price paid
per share
  
Total number of
shares purchased
as part of publicly
announced plan
  
Approximate
number of shares
that may yet be
purchased
October 1 - 31, 2009
  
-
  
 $
-
  
-  
  
1,026,490
November 1 - 30, 2009
  
-
  
 
-
  
-
  
1,026,490
December 1 - 31, 2009
  
221(1)
  
 
-
  
-
  
     1,026,490(2)
 
(1) Shares of restricted stock delivered by a director to Manpower, upon vesting, to satisfy tax withholding requirements.
(2) Not to exceed a total purchase price of $182.1 million.
 
The remaining information required by this Item is set forth in our Annual Report to Shareholders for the fiscal year ended December 31, 2009, under the heading “Note 16 - Quarterly Data” (page 75) and “Corporate Information” (page 78) and in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010, under the caption “Equity Compensation Plan Information”, which information is hereby incorporated herein by reference.
 
Item 6.
Selected Financial Data
 
The information required by this Item is set forth in our Annual Report to Shareholders for the fiscal year ended December 31, 2009, under the heading “Selected Financial Data” (page 76), which information is hereby incorporated herein by reference.
 
 
23

 
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The information required by this Item is set forth in our Annual Report to Shareholders for the fiscal year ended December 31, 2009, under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (pages 17 to 39), which information is hereby incorporated herein by reference.
 
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
 
The information required by this Item is set forth in our Annual Report to Shareholders for the fiscal year ended December 31, 2009, under the heading “Significant Matters Affecting Results of Operations” (pages 36 to 39), which information is hereby incorporated herein by reference.
 
Item 8.
Financial Statements and Supplementary Data
 
The information required by this Item is set forth in the financial statements and the notes thereto (pages 42 to 75) contained in our Annual Report to Shareholders for the fiscal year ended December 31, 2009, which information is hereby incorporated herein by reference.
 
Item 9A.
Controls and Procedures
 
Disclosure Controls and Procedures
 
We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports filed by us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report.
 
Internal Control over Financial Reporting
 
The Management Report on Internal Control Over Financial Reporting is set forth on page 39 in our Annual Report to Shareholders for the fiscal year ended December 31, 2009 which information is hereby incorporated herein by reference. The Independent Registered Public Accounting Firm’s report with respect to the effectiveness of internal control over financial reporting is included on pages 41 of our Annual Report to Shareholders for the year ended December 31, 2009 which information is hereby incorporated herein by reference.
 
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
24

 
PART III
 
Item 10.
Directors and Executive Officers of the Registrant
 
 
(a)
Executive Officers. Reference is made to “Executive Officers of Manpower” in Part I after Item 4.
 
 
(b)
Directors. The information required by this Item is set forth in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010 under the caption “Election of Directors,” which information is hereby incorporated herein by reference.
 
 
(c)
The board of directors has determined that Edward J. Zore, chairman of the audit committee, is an “audit committee financial expert.” Mr. Zore is “independent” as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934.
 
 
(d)
Audit Committee. The information required by this Item is set forth in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010 under the caption “Meetings and Committees of the Board,” which information is hereby incorporated herein by reference.
 
 
(e)
Section 16 Compliance. The information required by this Item is set forth in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010 under the caption “Section 16(a) Beneficial Ownership Reporting Compliance,” which information is hereby incorporated herein by reference.
 
 
(f)
We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller. We have posted the Code on our Internet website at www.manpower.com.
 
Item 11.
Executive Compensation
 
The information required by this Item is set forth in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010, under the caption “Executive and Director Compensation”; under the caption “Executive Compensation Committee Interlocks and Insider Participation”; and under the caption “Report of the Executive Compensation Committee of the Board of Directors,” which information is hereby incorporated herein by reference.
 
 
25

 
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
 
The information required by this Item is set forth in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010, under the caption “Security Ownership of Certain Beneficial Owners” and under the caption “Security Ownership of Management”; and under the caption “Equity Compensation Plan Information,” which information is hereby incorporated herein by reference.
 
Item 13.
Certain Relationships and Related Transactions, and Director Independence
 
The information required by this Item is set forth in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010, under the caption “Meetings and Committees of the Board,” which information is hereby incorporated herein by reference.
 
Item 14.
Principal Accountant Fees and Services
 
The information required by this Item is set forth in our Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2010, under the caption “Audit Committee Report,” which information is hereby incorporated herein by reference.

 
26

 
PART IV
 
Item 15.
Exhibits and Financial Statement Schedules.
 
 (a)(1) Financial Statements.
 
 
Page Number(s)
in Annual Reportto Shareholders
 
Consolidated Financial Statements (data incorporated by reference from the attached Annual Report to Shareholders):
   
     
Reports of Independent Registered Public Accounting Firm
                     40-41
 
     
    Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
                       42
 
     
    Consolidated Balance Sheets as of December 31, 2009 and 2008
                       43
 
     
    Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
                       44
 
     
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2009, 2008 and 2007
                       45
 
     
    Notes to Consolidated Financial Statements
                     46-75
 
 
 
(a)(2) Financial Statement Schedule.
 
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule
 
SCHEDULE II—Valuation and Qualifying Accounts
 
 
(a)(3) Exhibits.
 
 
See (c) below.
 
     Pursuant to Regulation S-K, Item 601(b)(4)(iii), Manpower hereby agrees to furnish to the Commission, upon request, a copy of each instrument and agreement with respect to long-term debt of Manpower and its consolidated subsidiaries which does not exceed 10 percent of the total assets of Manpower and its subsidiaries on a consolidated basis.

 
27

 
 
(c) Exhibits.
   
  3.1
Articles of Incorporation of Manpower Inc. incorporated by reference to Annex C of the Prospectus, which is contained in Amendment No. 1 to Form S-4 (Registration No. 33-38684).
   
  3.2
Amendment of Amended and Restated Articles of Incorporation of Manpower Inc., incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.
   
  3.3
Amended and Restated By-laws of Manpower Inc., incorporated by reference to the Company’s Current Report on Form 8-K dated April 28, 2009.
   
  4.1
Fiscal and Paying Agency Agreement between Manpower Inc. and Citibank, N.A. as Fiscal Agent, Principal Paying Agent, Registrar and Transfer Agent and Citibank International PLC as Irish Paying Agent, dated as of June 1, 2005 (including the forms of Rule 144A Global Note and Regulation S Global Note, attached thereto as Exhibits A and B, respectively), incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.
   
  4.2
Fiscal and Paying Agency Agreement between Manpower Inc. and Citibank, N.A. as Fiscal Agent, Principal Paying Agent, Registrar and Transfer Agent and Citibank International PLC as Irish Paying Agent, dated as of June 14, 2006 (including the form of Note attached thereto as Schedule 1), incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.
   
10.1
Amended and Restated Manpower Inc. Senior Management Performance-Based Deferred Compensation Plan, incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. **
   
10.2(a)
Five-Year Credit Agreement dated as of October 8, 2004 among Manpower Inc., the initial lenders named therein, Citibank N.A., Wachovia Bank, BNP Paribas, Bank One N.A., and The Royal Bank of Scotland, incorporated by reference to the Company’s Current Report on Form 8-K dated October 14, 2004.
   
10.2(b)
Amendment to Five-Year Credit Agreement dated as of March 14, 2005, incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.
   
10.2(c)
Amendment No. 2 to the Credit Agreement dated as of January 10, 2006, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
   
10.2(d)
Amendment No. 3 to the Credit Agreement dated as of November 16, 2007, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.
   
10.2(e)
Amendment No. 4 to the Credit Agreement dated as of October 16, 2009, incorporated by reference to the Company’s Current Report on Form 8-K dated October 16, 2009.
   
10.3
Amended and Restated Manpower 1991 Executive Stock Option and Restricted Stock Plan, incorporated by reference to Form 10-Q of Manpower Inc. dated September 30, 1996. **
   
10.4
Manpower Savings Related Share Option Scheme, incorporated by reference to Amendment No. 1 to the Company’s Registration Statement on Form S-4 (Registration No. 33-38684). **
   
10.5
Manpower 1990 Employee Stock Purchase Plan (Amended and Restated effective April 26, 2005), incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.
   
10.6
Manpower Retirement Plan, as amended and restated effective as of March 1, 1989, incorporated by reference to Form 10-K of Manpower PLC, SEC File No. 0-9890, filed for the fiscal year ended October 31, 1989. **
   
10.7
1994 Executive Stock Option and Restricted Stock Plan of Manpower Inc. (Amended and Restated October 29, 2002), incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002. **

 
28

 
 
10.8
Manpower Inc. 2007 Corporate Senior Management Incentive Plan dated as of May 2, 2007, incorporated by reference to the Company’s Current Report on Form 8-K dated May 2, 2007. **
   
10.9(a)
Employment Agreement between Jeffrey A. Joerres and Manpower Inc. dated as of February 20, 2008, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.9(b)
Severance Agreement between Jeffrey A. Joerres and Manpower Inc. dated as of February 20, 2008, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.10(a)
Employment Agreement between Michael J. Van Handel and Manpower Inc. dated as of February 20, 2008, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.10(b)
Severance Agreement between Michael J. Van Handel and Manpower Inc. dated as of February 20, 2008, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.11(a)
Assignment Agreement by and among Manpower Inc., Manpower Holdings Limited and Barbara Beck dated as of December 20, 2005, incorporated by reference to the Company’s Current Report on Form 8-K dated December 20, 2005. **
   
10.11(b)
Letter Agreement by and among Manpower Inc., Manpower Holdings Limited and Barbara Beck dated as of April 1, 2008, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008. **
   
10.12(a)
Amended and Restated Assignment Agreement by and among Manpower Inc. and Jonas Prising dated as of December 29, 2008, incorporated by reference to the Company’s Current Report on Form 8-K dated December 29, 2008. **
   
10.12(b)
Employment Agreement between Francoise Gri and Manpower Inc. dated as of February 15, 2007, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.12(c)
Letter Agreement between Darryl Green and Manpower Inc. dated as of April 4, 2007, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.13(a)
Terms and Conditions Regarding the Grant of Awards to Non-Employee Directors under the 2003 Equity Incentive Plan of Manpower Inc. (Amended and Restated Effective January 1, 2006), incorporated by reference to the Company’s Current Report on Form 8-K dated December 19, 2005. **
   
10.13(b)
Terms and Conditions Regarding the Grant of Awards to Non-Employee Directors under the 2003 Equity Incentive Plan of Manpower Inc. (Amended and Restated Effective January 1, 2008), incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.13(c)
Manpower Inc. Compensation for Non-Employee Directors (Effective January 1, 2006), incorporated by reference to the Company’s Current Report on Form 8-K dated December 19, 2005. **
   
10.13(d)
Amended and Restated Severance Agreement between Barbara Beck and Manpower Inc. dated as of November 10, 2009, incorporated by reference to the Company’s Current Report on Form 8-K dated November 10, 2009. **
   
10.13(e)
Amended and Restated Severance Agreement between Jonas Prising and Manpower Inc. dated as of November 10, 2009, incorporated by reference to the Company’s Current Report on Form 8-K dated November 10, 2009. **
   
10.13(f)
Amended and Restated Severance Agreement between Owen J. Sullivan and Manpower Inc. dated as of November 10, 2009, incorporated by reference to the Company’s Current Report on Form 8-K dated November 10, 2009. **
 
29

10.13(g)
Amended and Restated Severance Agreement between Mara Swan and Manpower Inc. dated as of November 10, 2009, incorporated by reference to the Company’s Current Report on Form 8-K dated November 10, 2009. **
   
10.13(h)
Amended and Restated Severance Agreement dated November 10, 2008 between Manpower Inc. and Darryl Green, incorporated by reference to the Company’s Current Report on Form 8-K dated December 3, 2008. **
   
10.13(i)
Severance Agreement dated February 15, 2007 between Manpower Inc. and Francoise Gri, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.13(j)
Severance Agreement dated December 31, 2007 between Manpower Inc. and Kenneth C. Hunt, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.13(k)
2003 Equity Incentive Plan of Manpower Inc. (Amended and Restated Effective April 28, 2009), incorporated by reference to the Company’s Registration Statement on Form S-8 dated September 4, 2009. **
   
10.13(l)
Form of Indemnification Agreement, incorporated by reference to the Company’s Current Report on Form 8-K dated October 31, 2006.
   
10.14(a)
Form of Nonstatutory Stock Option Agreement, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.14(b)
Form of Performance Share Unit Agreement, incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.14(c)
Form of Restricted Stock Agreement (CEO Form), incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. **
   
10.14(d)
Form of Restricted Stock Unit Agreement, incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. **
   
10.14(e)
Form of Career Share Unit Agreement, incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. **
   
12.1
Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
   
13
2009 Annual Report to Shareholders. Pursuant to Item 601(b)(13) of Regulation S-K, the portions of the Annual Report incorporated by reference in this Form 10-K are filed as an exhibit hereto.
   
14
Manpower Inc. Code of Business Conduct and Ethics (Amended and Restated Effective December 9, 2003) incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
   
21
Subsidiaries of Manpower Inc.
   
23.1
Consent of Deloitte & Touche LLP.
   
24
Powers of Attorney.
   
31.1
Certification of Jeffrey A. Joerres, Chairman and Chief Executive Officer, pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934.
   
31.2
Certification of Michael J. Van Handel, Executive Vice President and Chief Financial Officer, pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934.
   
32.1
Statement of Jeffrey A. Joerres, Chairman and Chief Executive Officer, pursuant to 18 U.S.C. ss. 1350.
   
32.2
Statement of Michael J. Van Handel, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. ss. 1350.
**     Management contract or compensatory arrangement.
30

 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
MANPOWER INC.
 
         
   
By:
 /s/ Jeffrey A. Joerres  
     
Jeffrey A. Joerres
Chairman, President and Chief Executive Officer
 
         
   
Date:
February 19, 2010
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
         
Name
 
 
 
Title
 
 
 
Date
 
 
         
/s/ Jeffrey A. Joerres
 
Chairman, President, Chief Executive Officer and a Director (Principal Executive Officer)
 
February 19, 2010
Jeffrey A. Joerres
       
         
/s/ Michael J. Van Handel
 
 
 
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
 
February 19, 2010
Michael J. Van Handel        
 
Directors: J. Thomas Bouchard, Marc J. Bolland, Gina R. Boswell, Cari M. Dominguez, Jack M. Greenberg, Terry A. Hueneke, Roberto Mendoza, Ulice Payne, Jr., John R. Walter and Edward J. Zore
 
     
February 19, 2010
       
 By:
/s/ Kenneth C. Hunt
   
 
Kenneth Hunt
   
 
Attorney-In-Fact*
   
 

*
Pursuant to authority granted by powers of attorney, copies of which are filed herewith.


 
31

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Shareholders of Manpower Inc.:

We have audited the consolidated financial statements of Manpower Inc. and subsidiaries (the "Company") as of December 31, 2009 and 2008, and for each of the three years in the period ended December 31, 2009, and the Company's internal control over financial reporting as of December 31, 2009, and have issued our reports thereon dated February 19, 2010; such consolidated financial statements and reports are included in the 2009 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of the Company listed in Item 15. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP
 
February 19, 2010
Milwaukee, Wisconsin
 


 
32

 

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
 
For the years ended December 31, 2009, 2008 and 2007, in millions:
 
Allowance for Doubtful Accounts:

                                         
     
Balance at
Beginning
of Year
   
Provisions Charged to Earnings
   
Write- Offs
   
Translation Adjustments
   
Reclassifications and Other
   
Balance at End of Year
   
 
2009
 
$
118.5
      $
27.8
      $
(39.0
)
    $
2.5
 
    $
8.5
   
$
118.3
   
 
2008
 
 
123.1
     
23.4
     
(21.5
)
   
(10.1
   
3.6
   
 
118.5
   
 
2007
 
 
109.9
     
21.8
     
(20.8
)
   
9.5
     
2.7
   
 
123.1
   

 
 
33
ex-12_1.htm
Exhibit 12.1
 
STATEMENT REGARDING COMPUTATION
OF RATIO OF EARNINGS TO FIXED CHARGES
 
MANPOWER INC.
(in millions)



   
2009
   
2008
   
2007
   
2006
   
2005
 
Earnings:
                             
     Earnings before income taxes from continuing operations
  $ (22.9)     $
442.6
    $ 777.0     $ 481.9     $ 387.0  
     Fixed charges
    183.9       200.9       185.2       162.8       153.2  
    $ 161.0     $ 643.5     $ 962.2     $ 644.7     $ 540.2  
                                         
Fixed charges:
                                       
     Interest (expensed or capitalized)
  $ 61.7     $ 64.2     $ 65.0     $ 54.1     $ 46.7  
     Estimated interest portion of rent expense
    122.2       136.7       120.2       108.7       106.5  
    $ 183.9     $ 200.9     $ 185.2     $ 162.8     $ 153.2  
                                         
Ratio of earnings to fixed charges
    0.9       3.2       5.2       4.0       3.5  

 
   
Note:
The calculation of ratio of earnings to fixed charges set forth above is in accordance with Regulation S-K, Item 601(b)(12). This calculation is different than the fixed charge ratio that is required by our various borrowing facilities.



ex-13.htm
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

 

 

 

Dear Manpower Investor:
 
In 2008, we interviewed 10 million people and placed 4 million people into jobs. In 2009, by comparison, we interviewed 11 million people and placed 3 million people into jobs. We felt first-hand what the world was experiencing. In a nutshell – it was a tough year.
 
Accordingly, we experienced some of the most rapid drops in revenue in the history of our company; partially offsetting that was the increase of revenue generated by our Right Management business, through which we assisted over 225,000 people transition into new careers. Many of these were what we call “Industry Migrants,” people who were faced with the challenge of moving from one industry to another, learning new skills and adapting to new industry cultures.
 
No surprise, it was also a difficult time for almost all of our clients. There was a tremendous amount of pressure to reduce costs, focus the workforce and redefine how work gets done. Finding ways to do more with less was the theme. So we faced the challenge, developed solutions, and in doing so we improved our brand and improved our company.
 
This recession was different than previous downturns. Clearly, the labor market was profoundly affected, as we saw the most severe and protracted drop in employment in U.S. history, and in many cases on a worldwide basis. It will take longer to emerge and it will force many industries to restructure permanently. We are at the inflection point. Now, we have a unique opportunity to leverage our expertise to help get the world back to work. Many companies are struggling to create or improve their workforce strategy. Employers can now only afford to hire as demand for their product or service presents itself. Companies are grappling with new challenges, creating an unprecedented need for on-demand talent worldwide.
 
 
 
 
6 Manpower 2009 Annual Report   Shareholder's Letter
 

The difficulty in the labor market is clearly evident in our numbers. Our revenue for 2009 was $16 billion, down 26% and our net loss was $9 million, down from earnings of $206 million in 2008. Our net earnings, excluding non-recurring items, was $86 million. Our operating cash flow continued to be strong, at $414 million, ending the year with $1 billion of cash. We moved quickly and appropriately to reduce our expense base by 15%, but never at the price of endangering our position in a market or our ability to recover with speed. Our geographic footprint, which we are committed to, remained intact, with 87% of our revenue generated from outside the U.S. Our Right Management team did an outstanding job as they guided companies in transitioning people out of their businesses. Our revenues in Right Management improved by 24% to $559 million, and our operating earnings finished the year at $113 million.
 
Our strong financial position and resolve for our strategic direction prevented us from so-called strategy drift. Yet, we remained agile to adjust our execution based on the environment, accelerating programs and initiatives appropriately and stopping those that were irrelevant as a result of the velocity of the downturn. We enter this recovery stronger. Our agility and ability to adjust quickly will prove to be a major advantage as we move into 2010 and beyond.
 
Robust times are ahead for us. The trends in our industry are powerful, in mature markets as well as the emerging markets. In the mature markets, we are hearing from our clients that they are going to need to have a more flexible approach to their workforce. They are uncertain of their ability to attract the talent they need, so they will rely on us. And then, of course, there are those markets in Europe and Asia that are emerging, where the penetration of our services is currently low, but will no doubt grow. We see both of these as massive opportunities as we move into the next phase of this recovery. We may not see the upside immediately, as we believe 2010 will have a slow start. But, we are confident that as we look to 2011 and 2012 these secular trends will be robust. So will we see a “less jobs recovery?” Sure we will. But it is a trend that holds promise for us because companies will remain cautious to hire permanently in sluggish demand, yet their need for talent will increase, and we provide the bridge to get the world back to work.
 
 
 
 

We are approaching this period of time with confidence. This is based on the team that we have assembled and the strategic priorities that we have established to take advantage of what the market presents. We have much to be proud of. In 2009, we proved to the world that our innovation, geographic presence and major initiatives are best in class. For example, MyPath, the world’s first socialnetwork dedicated to improving individual skills and the advancement of careers in the professional areas of IT, engineering and finance was extremely well-received. We believe that our brand and knowledge will be the trusted source as individuals come to grips with the challenges of living, learning and working. Through a word-of-mouth approach only, we have attracted over 170,000 unique visitors. In January 2010, we publicly launched MyPath at the World Economic Forum Annual Meeting in Davos, and have seen a significant pick up in visitors since then.
 
We rolled out the second version of our Branch and Candidate Experience initiative to further embed the Candidate Experience mindsets. We trained our team to efficiently, yet very effectively, provide the best experience for our candidates and associates, which will ensure that we deliver the best match for our clients. It was also this training that helped our field offices set the right tone and have the right conversations with our increasing number of candidates amidst the limited availability of job openings.
 
We also expanded our Manpower Business Solutions (MBS) in 2009. We added resources in areas that we believe will be the first movers in the recovery. We invested in MBS, particularly Recruitment Process Outsourcing (RPO). Not only did we expand in our capabilities, we’ve also greatly expanded our book of business to the point where we are now the world’s leader, on a global basis, in the RPO area. We see this trend continuing and we are confident that we are well-positioned in the global market from a brand and capability perspective.
 
 
8 Manpower 2009 Annual Report   Shareholder's Letter
 

Our Right Management business is stronger than ever before. No doubt, 2009 was the “cyclical” time for Right Management to move to center stage, as companies downsized their workforce. As a result, hundreds of thousands of people entered our Right Management doors to find out more about themselves and find new careers. We used this opportunity to not only strengthen our Right Management brand, but reposition it closer to Manpower and invest in our Talent Management practice. It worked, as the number of coaching and assessment assignments in Right Management reached record levels. We have positioned ourselves well, as these services are in high demand during a recovery.
 
Our continual positioning and enhancement of our brand, and the relevant services that we are offering to our clients and prospects are anchored in what we know and what we research. We have a large role in redefining work. The increased velocity of change is happening every day in the way work is performed all over the world. We have identified these changes in four World of Work megatrends. We didn’t stumble upon these trends; in fact, we intensely researched them with on-the-ground expertise and with an intense curiosity with our clients and candidates.
 
The Demographics and Talent Mismatch is the conundrum that both individuals and companies are feeling right now. As the working age population declines and companies are looking for talent, they’re looking for talent in a much more specific way, yet individuals are also being more selective when they can, or are feeling out of touch with what companies are looking for. This is happening on a global basis.
 
Individual Choice is creeping in wherever possible. Individuals are exercising their clout as they realize in some cases they have the skills that are in most demand, which in turn is requiring companies to think differently about how they attract, retain and stay relevant to an ever select group of talented individuals.
 
 

Rising Customer Sophistication is happening across the board. The transparency and velocity of information exchange throughout the entire value chain is creating innovation and tension at every level within that chain.
 
Technological Revolutions are at the heart of almost all of this. The ability to have the power to change where and when and how we work, enabling the organization and individuals to be more agile and innovative is what is happening on a daily basis and what you have seen so far is only the tip of the iceberg.
 
These World of Work trends are foundational. They’re foundational to how we act, where we invest and where we focus our thought leadership. They are drivers of secular growth at the core of our business as well as in the specialty areas and outcome-based solutions. It is our grasp of these trends and our talent aligned to these trends that give us the confidence that we are addressing our clients and candidates with real solutions – solutions that are practical, adaptable and flexible.
 
We are aggressive with the execution of our strategy, which is an outside-in approach, focusing on services that deliver value to our clients and candidates that address this ever-changing World of Work. We continue to grow our capabilities organically and, where appropriate, acquire companies that give us an acceleration and catalytic affect when using our capital, brand and geographic footprint.
 
Our strategy is clear. Over the next three years, we will leverage our strengths, global footprint and brand to aggressively expand our specialty staffing and new sectors and services. Regardless of what the economy does, we are confident that we will move forward at a pace greater than our competition.
 
 
10 Manpower 2009 Annual Report   Shareholder's Letter
 

We will address the World of Work trends head on and position ourselves in a way that delivers value to our clients and candidates. We will execute on a daily basis, as well as further our four strategic priorities:
 
The Manpower Experience does define our brand. It is not only what we do, but it’s how we do it. This is what our clients who have been with us for years tell us makes the difference. We are now codifying and ensuring this experience is felt from the first moment there is an encounter with a Manpower company. Providing this “best of experience” for our candidates and clients will deliver value, bode well for our brand and deliver higher profitability.
 
We will leverage much of this Manpower Experience in what we are doing in Professional Staffing and Specialty Services. Several years ago, we made the decision to broaden our range of services beyond our core staffing. We have been very successful and now we are going to move faster. We will leverage our global footprint and the full range of services to balance our mix of business, turn up the volume on our higher margin specialty businesses and grow our professional staffing business. 2010 will be critical for us to deploy go-to-market strategies in this area. Recently, we announced that we will acquire one of the largest IT staffing providers in the U.S., bringing our specialty business and professional staffing business to account for over 20% of our overall revenues and one third of our gross margin. We are able to marry our organic success with an acquisition, in this case, to significantly enhance our ability to help our clients win.
 
A backbone to all of this will be our Digital Strategy and the implementation of our digital platforms. Our digital strategy is a key focus area as technology is ubiquitous and along with this ubiquity is the rise of social networks, Web 2.0 and mobile connectivity. As a result, our clients and candidates are expecting us to interact with them in a different way. This is a perfect opportunity for us to inject the Manpower Experience into the digital world. Over the past few years, we have been preparing to work in this space and do it in the right way. The introduction of MyPath, combined with core offerings like Direct Source, Direct Time, Direct Office and Direct Talent, enhances our position as the bricks and clicks premier brand.
 
 

This also gives us opportunities to enter or expand into New Sectors and Services. The environment is allowing for it and we are more than prepared. Our combined assets of the Manpower group of companies is a compelling offering. We are deploying a unique consulting offering based on our combined assets to deliver a workforce strategy that is aligned with our clients’ business strategy, an area we know is highly sought after by many companies. Additionally, we will continue to develop and institutionalize our world-leading global offering for Manpower Business Solutions and our Recruitment Process Outsourcing service, and explore virtual work to leverage its value for individuals and companies.
 
The success of these four strategic priorities, coupled with the secular growth and recovering economy, indicates that 2010 will be better than 2009. We will still be challenged because of the slow start in this “less jobs recovery,” but we are moving forward.
 
We are building momentum in the market. We are getting better and stronger every single day as more and more companies and individuals are drawn to the Manpower group of companies. Our value and values become more pronounced and required. Why? Because we consistently outperform the market in delivering value. The downturn, in many ways, fired up our team. They never hesitated to do more, muscle through and work harder to keep us on track. I am proud to lead such an engaged and motivated team. Thanks team.
 
Through these tough times, we were more creative and innovative than ever before. We will need to continue to challenge ourselves to think creatively, to be agile and make sure that our strategies are relevant and practical. And we too, like our clients, have to do more with less. It is the balance of tension that we must manage to ensure that we continue to keep a longitudinal view, while at the same time, anticipating the impact that the economy will throw at us on a day-to-day basis.
 
 
12 Manpower 2009 Annual Report   Shareholder's Letter
 

Even in this difficult time, we are proud of the number of people and lives that we have positively affected – and it is much more gratifying during these times. It is our ability to balance the profitability with the sustainability that allows us to help the economy grow by putting people of all kinds back to work. We are part of creating economic value by creating jobs, building and upskilling talent. We build capability not only in people, but in communities, which translates into sustainable profitability for our organization. This is central to our mission-based culture. It is this culture that kept us calm and carried us through this difficult time.
 
2009 also marked the passing of our co-founder, Elmer Winter, which gave us a moment to reflect upon what we stand for today. Our mission to connect people to meaningful work has been firmly rooted in our DNA since the company’s founding over 62 years ago. We are fortunate to have been founded by a man with such a sense of mission. We take very seriously the responsibility that we have in building the World of Work, interviewing millions and millions of people each year, connecting millions of people to work and helping thousands of people transition from one work environment to another.
 
No doubt, 2010 will offer more challenges; challenges that the Manpower team will not only overcome, but excel in. We view the opportunities in front of us as far greater than the obstacles. So no matter whether we have a robust or tepid recovery, you can count on the Manpower team to tackle the challenge and win. We have the ability and agility to aggressively pursue the opportunities that 2010 offers. Now, let’s get to work.
 
 
JEFFREY A. JOERRES
CHAIRMAN, CEO & PRESIDENT
FEBRUARY 19, 2010
 
 
Shareholder's Letter   Manpower 2009 Annual Report 13
 
 
 

At a Glance
 
2009 Segment Revenues 2009 Segment Operating Unit Profit
IN MILLIONS ($) IN MILLIONS ($) 
   
   
Stock Information      
       
SHARES OUTSTANDING 2009 SHARE PRICE HIGH AND LOW FISCAL YEAR END DATE NUMBER OF SHARES ISSUED
78,576,560 $61.48/ $23.75 December 31 104,397,965
(as of Dec 31, 2009)     (as of Dec 31, 2009)
  STOCK EXCHANGE MARKET CAPITALIZATION  
AVG. DAILY VOLUME NYSE (Ticker: MAN) $4.3 billion  
900,000 +   (as of Dec 31, 2009)  
shares per day in 2009      
   
   
Systemwide People Placed in Permanent,
Offices Temporary and Contract Positions
   
Offices across 82 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.
 
 
   
Strong Record of Long-Term Revenue Growth
IN BILLIONS ($)
 
 
14 Manpower 2009 Annual Report     Manpower at a Glance
 

Financial Highlights
 
   
Revenues from Services (a) Operating Profit
IN MILLIONS ($) IN MILLIONS ($)
   
2009 was the most difficult year in the history of the Operating Profit decreased 92% from 2008. Excluding
company. Yet at the same time, we have positioned the non-recurring items, Operating Profit decreased
ourselves so that 2010 is truly an inflection point. 78% for the year.
   
   
Operating Profit Margin Return on Invested Capital (ROIC)
Operating Profit Margin decreased to 0.26% in 2009, Return on Invested Capital is defined as operating profit
or 0.85% excluding the non-recurring items, due to the after tax divided by the average monthly total of net
drop in gross margin and the deleveraging of our debt and equity for the year. Net debt is defined as total
expense base as a result of the decline in revenues. debt less cash and cash equivalents.
   
   
Net Earnings from Continuing Operations Net Earnings Per Share
IN MILLIONS ($) from Continuing Operations – Diluted ($)
Net Earnings from Continuing Operations decreased Net Earnings Per Share from Continuing Operations –
to a loss of $9.2 million, or earnings of $86.0 million Diluted decreased to a loss of $0.12, or earnings of
excluding non-recurring items. $1.10 excluding non-recurring items.
   
   
Emerging Market Revenue Total Capitalization
IN MILLIONS ($) IN MILLIONS ($)
Emerging market revenue declined 16% in 2009, with Debt as a percentage of total capitalization was 23%
declines in the key expansion markets: India (-6%), in 2009 compared to 28% in 2008 and 26% in 2007.
China (-24%) and Eastern Europe (-17%).  

 
(a) Revenues from Services includes fees received from our franchise offices of $35.8 million, $35.7 million, $35.7 million, $30.9 million and $22.3 million for 2005, 2006, 2007, 2008 and 2009, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $1,510.7 million, $1,497.0 million, $1,408.5 million, $1,148.1 million and $746.7 million for 2005, 2006, 2007, 2008 and 2009, respectively. In the United States, where the majority of our franchises operate, Revenues from Services includes fees received from the related franchise operations of $24.9 million, $24.4 million, $24.2 million, $17.7 million and $10.5 million for 2005, 2006, 2007, 2008 and 2009, respectively. These fees are primarily based on revenues generated by the franchise operations, which were $1,196.9 million, $1,146.1 million, $1,055.1 million, $746.2 million and $459.3 million for 2005, 2006, 2007, 2008 and 2009, respectively.
   
(b) Amounts exclude the impact for the goodwill impairment charge related to our investment in Jefferson Wells, loss on the sale of an equity investment, charge related to the extinguishment of our interest rate swap agreements and amended revolving credit facility, and global reorganization charges. (See Note 1 to the Consolidated Financial Statements for further information.)
   
(c) Amounts exclude the impact of the French business tax refund, French payroll tax modification, French competition investigation, goodwill and intangible asset impairment charge related to our investment in Right Management and the global reorganization charges. (See Note 1 to the Consolidated Financial Statements for further information.)
   
(d) Amounts exclude the impact of the payroll tax modification in France, French competition investigation and reorganization charges. (See Note 1 to the Consolidated Financial Statements for further information.)
 
Financial Highlights     Manpower 2009 Annual Report 15
 

     
     
     
     
     
    Table of Contents
     
     
     
     
     
  17 MANAGEMENT’S DISCUSSION & ANALYSIS
  19 FINANCIAL MEASURES
  39 MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  40 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  42 CONSOLIDATED STATEMENTS OF OPERATIONS
  43 CONSOLIDATED BALANCE SHEETS
  44 CONSOLIDATED STATEMENTS OF CASH FLOWS
  45 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
  46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  76 SELECTED FINANCIAL DATA
  76 PERFORMANCE GRAPH
  77 PRINCIPLE OPERATING UNITS
  78 CORPORATE INFORMATION
     
     
     
     
     

Management’s Discussion & Analysis
of financial condition and results of operations
 
Business Overview
 
 
Manpower Inc. is a world leader in the employment services industry. Our global network of nearly 4,000 offices in 82 countries and territories allows us to meet the needs of our clients in all industry segments, whether they are global, multinational or local companies. By offering a complete range of services, we can help any company – no matter where they are in their business evolution – raise productivity through improved strategy, quality, efficiency and cost reduction across their total workforce.
 
Manpower Inc.’s five major brands – Manpower, Manpower Professional, Elan, Jefferson Wells and Right Management – provide a comprehensive range of services for the entire employment and business cycle including:
This comprehensive and diverse business mix allows us to mitigate the cyclical effects of the national economies in which we operate.
 
Our leadership position also allows us to be a center for quality employment opportunities for people at all points in their career paths. In 2009, we found permanent and temporary jobs for three million people who worked to help our more than 400,000 clients meet their business objectives. Seasoned professionals, skilled laborers, mothers returning to work, elderly persons wanting to supplement pensions and disabled individuals – all turn to the Manpower group of companies for employment. Similarly, governments of the nations in which we operate look to us to help reduce unemployment and train the unemployed with skills they need to enter the workforce. In this way, our Company is a bridge to permanent employment for those who desire it.
 
Our industry is large and fragmented, comprised of thousands of firms employing millions of people and generating billions of U.S. Dollars in annual revenues. It is also a highly competitive industry, reflecting several trends in the global marketplace, notably increasing demand for skilled people and consolidation among clients in the employment services industry itself.
 
Management’s Discussion & Analysis   Manpower 2009 Annual Report 17
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
We manage these trends by leveraging established strengths, including one of the employment services industry’s most recognized and respected brands; geographic diversification; size and service scope; an innovative product mix; and a strong client base. While staffing is an important aspect of our business, our strategy is focused on providing both the skilled employees our clients need and high-value workforce management, outsourcing and consulting solutions.
 
Client demand for employment services is dependent on the overall strength of the labor market and secular trends toward greater workforce flexibility within each of the countries in which we operate. Improving economic growth typically results in increasing demand for labor, resulting in greater demand for our staffing services. During periods of increasing demand, we are able to improve our profitability and operating leverage as our current cost base can support some increase in business without a similar increase in selling and administrative expenses. During these periods, we generally see an increase in our working capital needs, resulting from an increase in our accounts receivable balance in-line with the revenue growth, which may result in a decline in operating cash flows.
 
Correspondingly, during periods of weak economic growth or economic contraction, the demand for our staffing services typically declines. When demand drops, our operating profit is typically impacted unfavorably as we experience a deleveraging of our selling and administrative expense base as expenses may not decline at the same pace as revenues. In periods of economic contraction, as we experienced throughout 2009, we will have more significant expense deleveraging, as we can only reduce selling and administrative expenses to a certain level without negatively impacting the long-term potential of our branch network and brands.
 
The nature of our operations is such that our most significant current asset is accounts receivable, with an average days sales outstanding of approximately 60 days based on the markets where we do business. Our most significant current liabilities are payroll related costs, which are paid either weekly or monthly. As the demand for our services increases, we generally see an increase in our working capital needs, as we continue to pay our associates on a weekly or monthly basis, while the related accounts receivable are outstanding for much longer. Conversely, as the demand for our services declines, we generally see a decrease in our working capital needs, as the existing accounts receivable are collected and not replaced at the same level, resulting in a decline of our accounts receivable balance, with less of an effect on current liabilities due to the shorter cycle time of the payroll related items. This may result in an increase in our operating cash flows, however any such increase would not be sustainable in the event that the economic downturn continued for an extended period.
 
Our career transition services are counter-cyclical to our staffing services, which helps to minimize the impact of an economic downturn on our overall financial results.
 
Due to our industry’s sensitivity to economic factors, the inherent difficulty in forecasting the direction and strength of the economy and the short-term nature of staffing assignments, it is difficult to forecast future demand for our services with any reasonable certainty. As a result, we monitor a number of economic indicators, as well as recent business trends, to predict future revenue trends for each of our reportable segments. Based upon these anticipated trends, we determine what level of personnel and office investments are necessary to take full advantage of growth opportunities.
 
Our staffing business is organized and managed primarily on a geographic basis, with Jefferson Wells and Right Management operating as separate global business units. Each country and business unit generally has its own distinct operations, and is managed locally by its own management team. Each operation reports directly or indirectly through a regional manager, to a member of executive management. Given this reporting structure, all of our operations have been segregated into the following reporting segments: Americas, which includes United States and Other Americas; France; EMEA (Europe, Middle East and Africa, excluding France), which includes Italy and Other EMEA; Asia Pacific; Right Management; and Jefferson Wells.
 
The Americas, France, EMEA, and Asia Pacific segments derive a significant majority of their revenues from the placement of contingent workers. The remaining revenues within these segments are derived from other human resource services, including permanent employee recruitment, temporary and permanent employee testing, selection, and training and Manpower Business Solutions (MBS); MBS includes task outsourcing, vendor management, onsite human resource services and Recruitment Process Outsourcing (RPO). Jefferson Wells’ revenues are derived from services related to risk advisory, tax, and finance and accounting. Right Management’s revenues are derived from outplacement and consulting services. Segment revenues represent sales to external clients. Due to the 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.
 
18 Manpower 2009 Annual Report   Management’s Discussion & Analysis
 

Financial Measures – Constant Currency And Organic Constant Currency
 
Changes in our financial results include the impact of changes in foreign currency exchange rates and acquisitions. We provide “constant currency” and “organic constant currency” calculations in this report to remove the impact of these items. We express year-over-year variances that are calculated in constant currency and organic constant currency as a percentage.
 
When we use the term “constant currency,” it means that we have translated financial data for a period into U.S. Dollars using the same foreign currency exchange rates that we used to translate financial data for the previous period. We believe that this calculation is a useful measure, indicating the actual growth of our operations. We use constant currency results in our analysis of subsidiary or segment performance. We also use constant currency when analyzing our performance against that of our competitors. Substantially all of our subsidiaries derive revenues and incur expenses within a single country and, consequently, do not generally incur currency risks in connection with the conduct of their normal business operations. Changes in foreign currency exchange rates primarily impact reported earnings and not our actual cash flow unless earnings are repatriated.
 
When we use the term “organic constant currency,” it means that we have further removed the impact of acquisitions in the current period from our constant currency calculation. We believe that this calculation is useful because it allows us to show the actual growth of our pre-existing business.
 
Constant currency and organic constant currency percent variances, along with a reconciliation of these amounts to certain of our reported results, are included on pages 27 and 28.
 
Results Of Operations – Years Ended December 31, 2009, 2008 and 2007
 
Given the current economic environment and the level of revenue declines that we have experienced in our staffing markets, we have initiated a number of cost reduction measures to try to minimize the impact on our overall profitability. Subsequent to September 2008, we have reviewed our direct costs and selling and administrative expenses and reduced our full-time equivalent employees by over 7,000 or 20% of our employee base and closed over 550 branches or 12% of our branches. This includes the transition of a majority of Jefferson Wells professionals to project-based roles, where they are only compensated if utilized on client engagements as we try to improve our staff utilization in light of the revenue declines within this business.
 
In reviewing our various cost control measures, we continue to balance the value of preserving our branch network and investing in our strategic initiatives against the desire to reduce costs and maintain profitability. We are focused on making the appropriate cost reductions, while trying to position ourselves to take advantage of any future economic recovery. We believe this has allowed us to take market share because we have maintained our infrastructure at the appropriate level while upgrading the skills of our sales team. We believe that maintaining our brand presence in key markets is critical to our ability to rebound quickly when the economic conditions improve. However, if the economic downturn continues for an extended period of time, or becomes more severe, we may decide to undertake further cost reductions, primarily consisting of additional employee reductions and branch closures.
 
The effects of the economic downturn have impacted the demand for our services over the past several quarters. Based upon historical experience, we would expect our businesses to return to growth when the underlying economies improve and eventually to exceed previous revenue levels. The strength of this growth will be dependent on the level of economic growth. Given the uncertainties of predicting economic trends, however, it is not possible to predict when we will return to prior revenue and earnings levels.
 
Management’s Discussion and Analysis has been revised for the effects of the restatement discussed in Note 1 to the Consolidated Financial Statements.
 
Management’s Discussion & Analysis   Manpower 2009 Annual Report 19
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
CONSOLIDATED RESULTS – 2009 COMPARED TO 2008
 
The following table presents selected consolidated financial data for 2009 as compared to 2008.
 
                            Variance in  
                      Variance in     Organic  
                Reported     Constant     Constant  
(in millions, except per share data)   2009     2008     Variance     Currency     Currency  
Revenues from services $  16,038.7   $  21,537.1      (25.5 )%   (20.9 )%   (21.5 )%
Cost of services
  13,220.5     17,450.2     (24.2 )            
Gross profit   2,818.2     4,086.9     (31.0 )   (27.0 )   (27.7 )
Gross Profit Margin   17.6  %   19.0  %                  
Selling and administrative expenses
  2,715.5     3,430.3                    
Goodwill and intangible asset impairment charges
  61.0     163.1                    
Selling and administrative expenses   2,776.5     3,593.4     (22.7 )   (18.2 )   (18.9 )
Selling and administrative expenses as a % of revenues
  17.3  %   16.7  %                  
Operating profit   41.7     493.5     (91.5 )   (91.3 )   (91.9 )
Operating Profit Margin   0.3  %   2.3  %                  
Net Interest expense
  50.0     41.8     19.6              
Other expenses
  14.6     9.1     60.4              
(Loss) earnings before income taxes   (22.9 )   442.6                    
Provision for income taxes
  (13.7 )   237.1                    
Effective income tax rate
  59.9  %   53.6  %                  
Net (loss) earnings
$  (9.2 ) $  205.5                    
Net (loss) earnings per share – diluted $  (0.12 ) $  2.58                    
Weighted average shares – diluted   78.3     79.7      (1.7 )%            
 
The year-over-year decrease in Revenues from Services is primarily attributable to:
We continued to see stabilization and, in some instances, an improvement in year-over-year revenue trends in the fourth quarter of 2009 in most of our major markets. Since the demand for our services depends heavily on the economy and the labor markets in the various countries where we operate, it is difficult for us to predict the duration of these current trends, and therefore it is also difficult for us to predict our near-term revenue levels and profitability.
 
The overall 141 basis point (-1.41%) decrease in Gross Profit Margin is attributed to:
20 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

The 22.7% decrease in Selling and Administrative Expenses in 2009, or 18.2% decrease in constant currency, is due to:
Selling and Administrative Expenses as a percent of revenue increased by 0.6% (+60 basis points) in 2009 compared to 2008. The change in Selling and Administrative Expenses as a percent of revenue consists of:
Interest and Other Expenses is comprised of interest, foreign exchange gains and losses and other miscellaneous non-operating income and expenses. Interest and Other Expenses were $64.6 million in 2009 compared to $50.9 million in 2008. Net Interest Expense increased $8.2 million in 2009 to $50.0 million due primarily to the recording of $7.5 million of interest expense related to the early extinguishment of our interest rate swap agreements and amended revolving credit facility in the third quarter of 2009. Translation losses in 2009 were $0.8 million compared to gains of $2.9 million in 2008. Miscellaneous Expenses, net, which consist of other non-operating income and expenses, were $3.5 million in 2009 compared to $12.0 million in 2008. In 2009, we also incurred a $10.3 million loss related to a sale of an equity investment in Japan.
 
We recorded an income tax benefit of 59.9% for 2009 compared to an income tax expense at an effective rate of 53.6% for 2008. The change in rate was due to the non-deductibility of the goodwill impairment charges related to Jefferson Wells in 2009 and Right Management in 2008, the impact in each year due to the non-deductibility of the French competition case reserve, as well as a significant change in the amount and mix of non-U.S. earnings and related cash repatriations and other permanent items. This rate is different than the U.S. Federal statutory rate of 35% due primarily to the non-deductible goodwill impairment charges related to Jefferson Wells, the impact of valuation allowances recorded for non-U.S. net operating losses, the sale of an equity investment in Japan, and the amount and mix of non-U.S. earnings and related cash repatriations and other permanent items.
 
Net (Loss) Earnings Per Share – Diluted was a loss of $0.12 compared to earnings of $2.58 in 2008. This decrease includes:
Management’s Discussion & Analysis    Manpower 2009 Annual Report 21
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
Weighted Average Shares – Diluted decreased 1.7% to 78.3 million in 2009 from 79.7 million in 2008. This decline is primarily a result of an increase in the total antidilutive shares excluded from the calculation in 2009 compared to 2008. Due to the net loss in 2009, all of the stock-based awards were antidilutive and therefore were excluded from the Weighted Average Shares – Diluted calculation for the year ended December 31, 2009. In 2008, only those stock-based awards with exercise prices greater than the average market price of the common shares during 2008 were excluded from the Weighted Average Shares – Diluted calculation for the year ended December 31, 2008.
 
CONSOLIDATED RESULTS – 2008 COMPARED TO 2007
 
The following table presents selected consolidated financial data for 2008 as compared to 2007.
                            Variance in  
                        Variance in     Organic  
                  Reported     Constant      Constant  
(in millions, except per share data)   2008     2007      Variance      Currency     Currency  
Revenues from services $  21,537.1   $  20,486.1     5.1 %   0.5 %   (1.2 )%
Cost of services
  17,450.2     16,651.7     4.8              
Gross profit   4,086.9     3,834.4     6.6     2.3     (0.2 )
Gross profit margin   19.0  %   18.7  %                  
Selling and administrative expenses
  3,430.3     3,023.2                    
Goodwill and intangible asset impairment charges
  163.1                        
Selling and administrative expenses   3,593.4     3,023.2     18.9     14.7     11.8  
Selling and administrative expenses as a % of revenues
  16.7  %   14.8  %                  
Operating profit   493.5     811.2     (39.2 )   (43.8 )   (44.6 )
Operating profit margin   2.3  %   4.0  %                  
Net interest expense
  41.8     29.0     44.1              
Other expenses
  9.1     5.2     75.0              
Earnings before income taxes   442.6     777.0     (43.0 )   (48.8 )      
Provision for income taxes
  237.1     303.3     (21.9 )            
  Effective income tax rate
  53.6  %   39.0  %                  
Net earnings $  205.5   $  473.7     (56.6 )%   (61.0 )%      
Net earnings per share – diluted $  2.58   $  5.60     (53.9 )%   (58.2 )%      
Weighted average shares – diluted   79.7     84.6     (5.8 )%            
 
The year-over-year increase in Revenues from Services is primarily attributable to:
The year-over-year increase in Gross Profit is primarily attributed to:
The overall 30 basis point (+0.30%) increase in Gross Profit Margin is attributed to:
22 Manpower 2009 Annual Report    Management’s Discussion & Analysis
 

Acquisitions did not have a significant impact on Gross Profit Margin.
 
The 18.9% increase in Selling and Administrative Expenses in 2008, or 14.7% increase in constant currency is due to:
Selling and Administrative Expenses as a percent of revenue increased by 1.9% (+190 basis points) in 2008 compared to 2007. The change in Selling and Administrative Expenses as a percent of revenue consists of:
Interest and Other Expenses is comprised of interest, foreign exchange gains and losses and other miscellaneous non-operating income and expenses. Interest and Other Expenses was $50.9 million in 2008 compared to $34.2 million in 2007. Net Interest Expense increased $12.8 million to $41.8 million in 2008 from $29.0 million in 2007, due primarily to our Euro-denominated interest expense being translated into U.S. Dollars at a higher rate in 2008 compared to 2007. Foreign exchange gains and losses primarily result from intercompany transactions between our foreign subsidiaries and the U.S. Foreign exchange gains were $2.9 million in 2008 compared to $0.6 million in 2007. Other expense consists of bank fees and other non-operating expenses, and in 2008 was $12.0 million compared to $5.8 million in 2007.
 
We provided for income taxes at an effective rate of 53.6% for 2008 compared to an effective rate of 39.0% for 2007. The 2008 rate is higher due to the impact of the non-deductible goodwill and intangible asset impairment charge related to Right Management and certain discrete items including the non-deductible French legal reserve. Excluding the impairment charge and these discrete items, our effective tax rate for 2008 was 37.1%. This 37.1% rate is higher than the U.S. Federal statutory rate of 35% due primarily to the impact of valuation allowances recorded for non-U.S. net operating losses, U.S. state income taxes and the income tax cost associated with additional cash repatriations from our non-U.S. subsidiaries.
 
Net Earnings Per Share– Diluted decreased 53.9% to $2.58 in 2008 compared to $5.60 in 2007. This decrease includes:
Weighted Average Shares – Diluted decreased 5.8% to 79.7 million in 2008 from 84.6 million in 2007. This decline is primarily a result of our repurchase of 2.2 million shares and 6.1 million shares of our common stock during 2008 and 2007, respectively, and an increase in the total anti-dilutive shares excluded from the calculation in 2008 compared to 2007.
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 23
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
SEGMENT RESULTS
 
During the first quarter of 2009, our segment reporting was realigned due to a change in our management structure. Other Americas and Asia Pacific, previously reported in Other Operations, are now separate reportable segments. The United States and Other Americas reportable segments are reported as Americas. The Italy and Other EMEA reportable segments are reported as the EMEA segment. All previously reported results have been restated to conform to the current year presentation.
 
 
Americas – The Americas segment is comprised of 808 Company-owned branch offices and 220 stand alone franchise offices. In the Americas, Revenues decreased 16.7% (-12.6% in constant currency) in 2009 compared to 2008. In the United States (which represents 62.2% of the Americas’ revenues), Revenues declined 18.1%, or 22.9% excluding acquisitions. Mexico and Central America reported revenue increases of 1.5% and 23.3% in constant currency, respectively, and Argentina reported a revenue decline of 5.9% in constant currency.
 
The Americas segment declines were primarily due to a decrease in our staffing volumes, both in our core temporary recruitment business, particularly in the light industrial and the professional sectors, and in our permanent recruitment business, which declined 55.1% in the Americas and 57.4% in the United States. The revenue decline in the second half of 2009 for the Americas of 10.6%, 8.3% in constant currency, shows stabilization and some improvement in the market from the declines experienced in the first half of 2009, where revenues decreased 22.9%, 16.8% in constant currency. The United States market also saw stabilization and year-over-year improvement in business volumes later in the second half of 2009, with some signs of improvement in the light industrial, office, and professional business, which has continued into early 2010.
 
Gross Profit Margin decreased compared to 2008 due to a decrease in temporary staffing margins, which was primarily caused by pricing pressures due to the current economic environment, a change in the mix of our staffing business as we are seeing our higher-margin small/medium sized businesses decline at a faster rate than our key account business, and a change in the geographic mix of our staffing business as countries with higher gross profit margins reported larger declines in business than countries with relatively lower gross profit margins; and the decline in our permanent recruitment business. Acquisitions had a slightly positive impact on Gross Profit Margin in 2009.
 
Selling and Administrative Expenses decreased 11.3% in constant currency due primarily to continued cost control efforts in response to the slowing revenue levels, despite the impact of acquisitions. Included in Selling and Administrative Expenses was $2.1 million of reorganization costs, primarily related to severances. Selling and Administrative Expenses as a percent of revenues increased compared to 2008, as we avoided expense reductions that would have a negative impact on the long-term potential of our branch network and brands.
 
Operating Unit Profit (“OUP”) Margin in the Americas was -0.2% and 1.9% in 2009 and 2008, respectively. This decline is due to the decline in the United States, where OUP Margin was -1.6% in 2009 compared to 1.7% in 2008. The decrease was due to the decline in Gross Profit Margin, coupled with the deleveraging effect of the revenue decline as revenues have declined more than expenses. Acquisitions had a minimal impact on OUP Margin in 2009.
 
 
France – Revenues in France decreased 32.6% (-29.2% in constant currency) to $4.7 billion. This constant currency decline was due to a decline in the demand for our services as a result of softening in the manufacturing and construction industries, which is a large portion of our staffing business in France. Revenue trends improved through the year, with declines of 36.1% in the first half of 2009 improving to a decline of 13.8% in the fourth quarter. We continue to see modestly improving year-over-year revenue trends continuing into 2010 as our clients remain cautious as they move through this difficult market. Permanent recruitment revenues declined 37.8% in constant currency in 2009 compared to 2008.
 
Gross Profit Margin decreased in 2009 compared to 2008 primarily due to the $68.2 million impact of the modification to the calculation of payroll taxes recorded in 2008. Excluding this impact, Gross Profit Margin decreased in 2009 due to pricing pressures and the decline in the permanent recruitment business.
 
Selling and Administrative Expenses decreased 18.7% in constant currency partly due to unusual items in both years and partly as a result of our cost reduction efforts throughout the year. Included in Selling and Administrative Expenses in 2009 was the reversal of a $3.9 million (3.0 million) cost recorded in the first quarter of 2009 related to the French competition investigation, offset by $5.6 million of reorganization charges, most of which were recorded in the fourth quarter.
 
24 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

Included in the Selling and Administrative Expenses in 2008 was $54.1 million of costs recorded for a legal reserve related to the French competition investigation. Excluding these one-time items in 2009 and 2008, Selling and Administrative Expenses as a percentage of revenue increased in 2009 as compared to 2008 as we avoided expense reductions that would have a negative impact on the long-term potential of our branch network.
 
OUP Margin for 2009 was 0.4% compared to 4.3% in 2008. Included in OUP Margin for 2008 was the impact of the modification to the payroll tax calculation and the legal reserve related to the French competition investigation. Excluding these 2008 items, OUP Margin decreased in 2009 due to the decline in Gross Profit Margin, coupled with the expense deleveraging resulting from the significant decline in revenues.
 
 
EMEA – The EMEA region includes operations throughout Europe, the Middle East and Africa (excluding France), which covers a total of 30 countries delivering services through approximately 1,487 offices. In addition to employment services delivered under the Manpower and Manpower Professional brands, this region also includes Elan, which is a leading IT recruitment and managed services firm operating across 16 countries in the region, and Brook Street, which provides recruitment services in the United Kingdom. The largest operations in this segment are in Italy, the Nordics, Elan, the United Kingdom, the Netherlands and Germany which comprise 15.0%, 14.3%, 14.1%, 11.0%, 9.5% and 9.4% of EMEA Revenues, respectively.
 
Revenues in EMEA decreased 29.3% (-21.7% in constant currency) in 2009 compared to 2008. Italy had revenue declines of 37.4%, or 34.2% in constant currency. Constant currency revenue declines were experienced in all major markets throughout the year. Most markets are showing year-over-year improvements in the second half of 2009 compared to the first half of 2009, with the exception of Elan and the Netherlands, which have yet to see significant improvement. This is expected for Elan, as it is fairly typical to see the IT professional market lag the recovery of the more traditional skills. Permanent recruitment revenues in EMEA decreased 47.0% in constant currency during 2009 due to continuing declining trends in most of our markets.
 
The Gross Profit Margin decreased from prior year primarily due to the increase in pricing pressures in most of our markets, the shift in the mix of business to countries with lower profit margins and the decline in the permanent recruitment business.
 
Selling and Administrative Expenses decreased 18.0% in constant currency due to cost reduction efforts in response to the slowing revenue levels. Included in Selling and Administrative Expenses were $15.7 million of reorganization charges in EMEA, of which $4.9 million occurred in Italy, primarily related to severances and office closures. Offsetting these amounts was a $4.9 million (3.8 million) reversal of a reserve that we determined was no longer necessary. Expenses as a percent of revenues increased in 2009 compared to 2008 due to the expense deleveraging across the region, as revenues declined more than expenses. Despite the decreases in expenses, we are continuing to maintain a structure and office network that we believe is appropriate given the future opportunity in the European geographies.
 
OUP Margin for EMEA was 0.9% and 4.0% for 2009 and 2008, respectively. The decline was seen across the region, as OUP Margin for Italy was 2.9% in 2009 compared to 7.9% in 2008. The declines in OUP Margin were due to the Gross Profit Margin decline and the expense deleveraging as revenues declined more than expenses.
 
 
Asia Pacific – Revenues for Asia Pacific decreased 6.2%, or 9.2% in constant currency, in 2009 compared to 2008. In Japan (which represents 59.6% of Asia Pacific’s revenues), revenues declined 12.0% in constant currency in 2009 compared to 2008. Australia (17.9% of Asia Pacific’s revenues) saw improving revenue trends throughout the year, with a decline of 3.2% in constant currency during the second half of 2009, compared to the 18.9% decline in constant currency experienced in the first half of 2009. Revenues also showed improvement in India, with growth of 10.1% in constant currency in the second half of 2009 compared to flat revenue growth in the first half of 2009. Permanent recruitment revenues have decreased 58.2% in constant currency in 2009, as this business has been impacted more than the staffing business.
 
 
 
 
 
 
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 25
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
The Gross Profit Margin decreased in 2009 compared to 2008 primarily due to a change in the mix of our staffing business as we are seeing our higher-margin small/medium sized businesses decline at a faster rate than our key account business, and a change in the geographic mix of our staffing business as countries with higher gross profit margins reported larger declines in business than countries with relatively lower gross profit margins; and the decline in the permanent recruitment business.
 
Selling and Administrative Expenses decreased in 2009 compared to 2008 primarily due to the continued cost reduction efforts in response to the slowing revenue levels. Included in Selling and Administrative Expenses in 2009 were $2.6 million of reorganization charges, primarily related to severances and office closures, offset by a $4.3 million (¥392.4 million) gain in Japan related to the termination of a defined benefit pension plan. Expenses as a percent of revenues decreased in 2009 compared to 2008, as we were able to reduce operating expenses to compensate for the decline in revenues in these markets.
 
OUP Margin for Asia Pacific remained flat at 1.5% for 2009 compared to 1.6% for 2008, as we were able to reduce expenses at a similar rate compared to our decline in revenues and gross profit.
 
 
Right Management – Right Management is the world’s leading provider of integrated human capital consulting services and solutions across the employment lifecycle operating through over 300 offices in 50 countries.
 
Revenues increased 23.7% in 2009 to $559.4 million, or 28.5% in constant currency, as the demand for our counter-cyclical outplacement services grew considerably due to the economic slowdown we are currently experiencing. Right Management did see some slowing during the second half of the year, as demand for our outplacement services slowed as the economies started to stabilize and mass layoffs declined. The constant currency revenue increase for Right Management in the second half of 2009 was 12.8% in constant currency compared to the 45.0% constant currency increase experienced in the first half of 2009.
 
Gross Profit Margin increased in 2009 from 2008 as we effectively managed our variable direct costs given the significant increase in revenues. Also, the increase is due to a change in our business mix as we saw an increase in our higher-margin outplacement business.
 
Selling and Administrative Expenses increased 14.5% in constant currency to support the increased levels of business activity. However, as a percentage of revenue, expenses decreased in 2009 compared to 2008, as we focused on leveraging our expense base to service the increased demand without a proportionate increase in expenses.
 
OUP Margin for Right Management was 20.3% for 2009 compared to 9.9% for 2008 due to the increase in Gross Profit Margin and the better leveraging of Selling and Administrative Expenses.
 
 
Jefferson Wells – Jefferson Wells delivers professional services in the areas of risk advisory, tax, and finance and accounting. In partnership with its business alliances, Jefferson Wells delivers services in more than 40 countries and markets worldwide. In the fourth quarter of 2008, we transitioned a number of employees into project-based roles to reduce our fixed direct costs and improve our utilization of professional staff. Due to the continued decline in revenue levels in the second quarter of 2009, we made further changes to our business model and have transitioned the majority of professionals into project-based roles.
 
Revenues decreased during the year, to $192.3 million from $291.0 million in 2008, primarily due to declines in discretionary spending by our clients because of the current economic environment.
 
The Gross Profit Margin has declined from the 2008 level. We shifted our model in June 2009 to a variable workforce pay model, and transitioned a number of employees into project-based roles, improving our margins in the second half of 2009. However, overall margins were still below 2008 levels due to the impact of the lower utilization in the first half of the year.
 
26 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

Selling and Administrative Expenses decreased 29.3% due to a reorganization that occurred in the fourth quarter of 2008 and second quarter of 2009 to realign the business in response to the lower revenue levels. We recorded reorganization charges of $6.6 million and $4.0 million in 2009 and 2008, respectively, primarily related to severances and office closures. As a percent of revenues, expenses increased in 2009 compared to 2008, as we could not decrease expenses to the extent of the revenue decline without negatively impacting the long-term potential of our brand.
 
2009 OUP was a loss of $22.0 million compared to a loss of $19.6 million in 2008, as expense reductions did not fully compensate for the declines in Revenues and Gross Profit.
 
Financial Measures – Constant Currency And Organic Constant Currency Reconciliation
 
Certain constant currency and organic constant currency percent variances are discussed throughout this annual report. A reconciliation to the percent variances calculated based on our annual financial results is provided below. (See Constant Currency And Organic Constant Currency on page 19 for further information.)
 
                            Impact of     Organic  
    Reported                 Variance     Acquisitions     Constant  
Amounts represent 2009   Amount     Reported     Impact of     in Constant     (In Constant     Currency  
Percentages represent 2009 compared to 2008   (in millions)     Variance     Currency     Currency     Currency)     Variance  
Revenues from Services                                    
Americas:                                    
United States
$  1,593.7     (18.1 )%   %   (18.1 )%   4.8 %   (22.9 )%
Other Americas
  967.3     (14.4 )   (11.3 )   (3.1 )       (3.1 )
    2,561.0     (16.7 )   (4.1 )   (12.6 )   3.0     (15.6 )
France   4,675.5     (32.6 )   (3.4 )   (29.2 )       (29.2 )
EMEA:                                    
Italy
  950.8     (37.4 )   (3.2 )   (34.2 )       (34.2 )
Other EMEA
  5,371.7     (27.6 )   (8.4 )   (19.2 )   0.5     (19.7 )
    6,322.5     (29.3 )   (7.6 )   (21.7 )   0.4     (22.1 )
Asia Pacific   1,728.0     (6.2 )   3.0     (9.2 )       (9.2 )
Right Management   559.4     23.7     (4.8 )   28.5         28.5  
Jefferson Wells   192.3     (33.9 )       (33.9 )   1.1     (35.0 )
Manpower Inc. $  16,038.7     (25.5 )%   (4.6 )%   (20.9 )%   0.6 %   (21.5 )%
Gross Profit - Manpower Inc. $  2,818.2     (31.0 )%   (4.0 )%   (27.0 )%   0.7 %   (27.7 )%
Operating Unit (Loss) Profit                                    
Americas:                                    
United States
$  (26.2 )   (181.3 )%    %   (181.3 )%   (10.2 )%   (171.1 )%
Other Americas
  20.1     (22.4 )   (11.7 )   (10.7 )       (10.7 )
    (6.1 )   (110.6 )   (5.2 )   (105.4 )   (5.7 )   (99.7 )
France   20.8     (93.0 )   (0.4 )   (92.6 )       (92.6 )
EMEA:                                    
Italy
  27.9     (76.8 )   (0.3 )   (76.5 )       (76.5 )
Other EMEA
  29.4     (87.4 )   1.2     (88.6 )   2.6     (91.2 )
    57.3     (83.8 )   0.7     (84.5 )   1.7     (86.2 )
Asia Pacific   26.5     (9.3 )   10.6     (19.9 )       (19.9 )
Right Management   113.4     153.6     (5.2 )   158.8         158.8  
Jefferson Wells   (22.0 )   (12.5 )       (12.5 )   (0.4 )   (12.1 )
Operating Profit – Manpower Inc.    41.7     (91.5 )%   (0.2 )%   (91.3 )%   0.6  %   (91.9 )%
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 27
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
                            Impact of     Organic  
   
  Reported
                Variance     Acquisitions     Constant  
Amounts represent 2008   Amount     Reported     Impact of     in Constant     (In Constant     Currency  
Percentages represent 2008 compared to 2007   (in millions)     Variance     Currency     Currency     Currency)     Variance  
Revenues from Services                                    
Americas:                                    
United States
$  1,945.4     (0.9 )%   %   (0.9 )%   10.4 %   (11.3 )%
Other Americas
  1,129.8     12.2     3.7     8.5         8.5  
    3,075.2     3.6     1.3     2.3     6.9     (4.6 )
France   6,935.6     (1.3 )   7.4     (8.7 )       (8.7 )
EMEA:                                    
Italy
  1,519.5     8.7     8.2     0.5         0.5  
Other EMEA
  7,422.0     10.2     2.1     8.1     1.6     6.5  
    8,941.5     9.9     3.1     6.8     1.3     5.5  
Asia Pacific   1,841.6     14.2     8.3     5.9     1.5     4.4  
Right Management   452.2     9.7     0.3     9.4     0.6     8.8  
Jefferson Wells   291.0     (12.4 )       (12.4 )   0.2     (12.6 )
Manpower Inc. $  21,537.1     5.1 %   4.6 %   0.5 %   1.7 %   (1.2 )%
Gross Profit – Manpower Inc. $  4,086.9     6.6 %   4.3 %   2.3 %   2.5 %   (0.2 )%
Operating Unit Profit (Loss)                                    
Americas:                                    
United States
$  32.2     (59.8 )%   %   (59.8 )%   2.9 %   (62.7 )%
Other Americas
  25.9     (20.7 )   4.2     (24.9 )       (24.9 )
    58.1     (48.5 )   1.2     (49.7 )   2.1     (51.8 )
France   299.0     (23.4 )   3.5     (26.9 )       (26.9 )
EMEA:                                    
Italy
  120.3     16.0     8.7     7.3         7.3  
Other EMEA
  233.8     (3.6 )   3.7     (7.3 )   3.4     (10.7 )
    354.1     2.3     5.3     (3.0 )   2.3     (5.3 )
Asia Pacific   29.2     (29.5 )   11.8     (41.3 )   (11.2 )   (30.1 )
Right Management   44.7     28.2     (1.1 )   29.3     1.6     27.7  
Jefferson Wells   (19.6 )   (278.2 )       (278.2 )   (5.1 )   (273.1 )
Operating Profit – Manpower Inc.    493.5     (39.2 )%   4.6 %   (43.8 )%   0.8 %   (44.6 )%
 
Cash Sources And Uses
 
Cash used to fund our operations is primarily generated through operating activities and our existing credit facilities. We believe that our available cash and our existing credit facilities are sufficient to cover our future cash needs for the forseeable future. We assess and monitor our liquidity and capital resources globally. We use a global cash pooling arrangement, intercompany lending, and some local credit lines to meet funding needs and allocate our capital resources among our various entities. We anticipate cash repatriations to the United States from certain international subsidiaries and have provided for deferred taxes related to those foreign earnings not considered to be permanently invested. As of December 31, 2009 we have identified approximately $580.7 million of non-U.S. funds that will likely be repatriated, the majority of which is related to Manpower France. We may repatriate additional funds in the future as cash needs arise.
 
Our principal ongoing cash needs are to finance working capital, capital expenditures, 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 differs in each market where we operate.
 
During 2009, cash provided by operating activities was $414.3 million, compared to $792.0 million for 2008 and $432.2 million for 2007. The decrease in 2009 from 2008 is primarily attributable to the lower operating earnings. The increase in 2008 from 2007 was primarily due to the change in working capital, as accounts receivable declined significantly in the fourth quarter of 2008 as a result of a decrease in business volumes.
 
28 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

Accounts Receivable decreased to $3,070.8 million as of December 31, 2009 from $3,629.7 million as of December 31, 2008. This decrease is due primarily to decreased business volumes and a lower DSO (Days Sales Outstanding) offset by changes in foreign currency exchange rates. As business volumes decline, we receive payment on accounts receivable but do not add new accounts receivable at the same rate. In addition, our DSO for the fourth quarter of 2009 improved by seven days compared to the fourth quarter of 2008. This improvement resulted from a law change in France as well as DSO reductions in a number of countries, as we have focused on accounts receivable collections in the current economic environment. The French law change was effective January 1, 2009 and requires all invoices in France to be paid within 60 days. At December 31, 2009, this had a six day favorable impact on our overall DSO compared to the prior year. At constant exchange rates, the Accounts Receivable balance at December 31, 2009 would have been approximately $131.5 million lower than reported.
 
In addition to the cyclical factors impacting our cash flow and the improvements in accounts receivable, working capital was also impacted by our transition of our temporary staff in France from a weekly payroll to a monthly payroll. This change had an $85.0 million favorable impact on our working capital needs as the transition was implemented during the first half of 2009.
 
Offsetting these working capital reductions was the unfavorable impact of the 42.0 million ($55.6 million) competition investigation fine in France, which was paid in April of 2009.
 
Capital expenditures were $35.1 million, $93.1 million and $91.6 million during 2009, 2008 and 2007, respectively. These expenditures were primarily comprised of purchases of computer equipment, office furniture and other costs related to office openings and refurbishments, as well as capitalized software costs of $2.0 million, $6.3 million and $7.5 million in 2009, 2008 and 2007, respectively.
 
From time to time, we acquire and invest in companies throughout the world, including franchises. The total cash consideration paid for acquisitions, net of cash acquired, was $21.6 million, $242.0 million and $122.8 million in 2009, 2008 and 2007, respectively. Goodwill and intangible assets resulting from these 2009 acquisitions were $15.9 million and $3.8 million, respectively, as of December 31, 2009.
 
In April 2008, we acquired Vitae, a leading professional placement firm in the Netherlands, for total consideration, net of cash acquired, of $114.7 million (€72.6 million). Goodwill and intangible assets related to this transaction were $87.6 million and $15.9 million, respectively, as of December 31, 2009 and $85.4 million and $23.6 million, respectively, as of December 31, 2008.
 
In September 2009, we sold an equity investment in Japan for cash proceeds of $13.3 million.
 
In February 2010, we entered into an agreement to acquire COMSYS IT Partners, Inc., a leading professional staffing firm. Subject to the terms of the agreement, the value of the consideration of each outstanding share of COMSYS common stock would be $17.65, for a total enterprise value of $431.0 million, including net debt retired by us at closing. The consideration is expected to be approximately 50% Manpower common stock and approximately 50% cash, unless we elect to pay all cash. This acquisition is expected to close in the second quarter of 2010.
 
Repayments of debt were $227.4 million for 2009 compared to borrowings of $79.0 million and $4.9 million for 2008 and 2007, respectively. We use excess cash to pay down borrowings under various facilities when appropriate.
 
In August 2007 and October 2006, the Board of Directors authorized the repurchase of 5.0 million shares of our common stock, not to exceed a total purchase price of $400.0 million and $325.0 million, respectively. Share repurchases may be made from time to time and may be implemented through a variety of methods, including open market purchases, block transactions, privately negotiated transactions, accelerated share repurchase programs, forward repurchase agreements or similar facilities. Under the 2007 authorization, we repurchased 2.2 million and 1.7 million shares of common stock at a total cost of $112.2 million and $105.7 million during 2008 and 2007, respectively. No shares were repurchased in 2009. There are 1.1 million shares, at a cost of up to $182.1 million, remaining authorized for repurchase under this authorization as of December 31, 2009. Under the 2006 authorization, we repurchased 4.4 million shares of common stock during 2007 at a total cost of $325.0 million.
 
During each of 2009, 2008 and 2007, the Board of Directors declared total cash dividends of $0.74, $0.74 and $0.69 per share, respectively, resulting in total dividend payments of $58.0 million, $58.1 million and $57.1 million, respectively.
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 29
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
We have aggregate commitments of $1,758.6 million related to debt, operating leases, severances and office closure costs, and certain other commitments, as follows:
 
(in millions)   2010     2011-2012     2013-2014     Thereafter  
Long-term debt including interest $  33.9   $  485.5   $  292.0   $  –  
Short-term borrowings   41.3              
Operating leases   209.6     269.9     153.5     156.2  
Severances and other office closure costs   14.3     5.1     1.9      
Other   27.1     29.2     16.4     22.7  
  $  326.2   $  789.7   $  463.8   $  178.9  
 
Obligations arising from the pending acquisition of COMSYS IT Partners are excluded from the commitments above. Also excluded is our liability for unrecognized tax benefits, including related interest and penalties of $31.0 million, as we cannot determine the years in which these positions might ultimately be settled.
 
We recorded reorganization costs of $33.5 million, $37.2 million and $8.4 million in 2009, 2008 and 2007, respectively, in Selling and Administrative Expenses, primarily related to severances as well as office closures and consolidations in several countries. As of December 31, 2009, $57.8 million has been paid out of these reserves, of which $43.2 million was paid during 2009. We expect a majority of the remaining $21.2 million will be paid in 2010. (See Note 1 to the Consolidated Financial Statements for further information.)
 
We also have entered into guarantee contracts and stand-by letters of credit that total approximately $163.3 million and $158.0 million as of December 31, 2009 and 2008, respectively ($120.3 million and $107.6 million for guarantees, respectively, and $43.0 million and $50.4 million for stand-by letters of credit, respectively). Guarantees primarily relate to bank accounts, operating leases and indebtedness. The stand-by letters of credit relate to workers’ compensation, operating leases and indebtedness. If certain conditions were met under these arrangements, we would be required to satisfy our obligation in cash. Due to the nature of these arrangements and our historical experience, we do not expect to make any significant payments under these arrangements. Therefore, they have been excluded from our aggregate commitments identified above. The cost of these guarantees and letters of credit was $1.6 million and $1.0 million in 2009 and 2008, respectively.
 
Capital Resources
 
Total capitalization as of December 31, 2009 was $3,293.8 million, comprised of $757.3 million in debt and $2,536.5 million in equity. Debt as a percentage of total capitalization was 23% as of December 31, 2009 compared to 28% as of December 31, 2008.
 
EURO NOTES
 
 
We have €300.0 million aggregate principal amount of 4.50% notes due June 1, 2012 (the “€300.0 million Notes”). The €300.0 million Notes were issued at a price of 99.518% to yield an effective interest rate of 4.58%. The discount of €1.4 million ($1.8 million) is being amortized to interest expense over the term of the €300.0 million Notes. Interest is payable annually on June 1.
 
We also have €200.0 million aggregate principal amount of 4.75% notes due June 14, 2013 (the “€200.0 million Notes”). The €200.0 million Notes were issued at a price of 99.349% to yield an effective interest rate of 4.862%. The discount of €1.3 million ($1.6 million) is being amortized to interest expense over the term of the €200.0 million Notes. Interest is payable annually on June 14.
 
Both the €300.0 million Notes and the €200.0 million Notes are unsecured senior obligations and rank equally with all of our existing and future senior unsecured debt and other liabilities. We may redeem these notes, in whole but not in part, at our option at any time for a redemption price determined in accordance with the term of the notes. These notes also contain certain customary non-financial restrictive covenants and events of default.
 
When these facilities mature, we plan to repay these amounts with available cash or refinance them with new long-term facilities. In the event that the economy continues to decline for an extended period of time, we may be unable to repay these amounts with available cash and, as such, we may need to replace these borrowings with new long-term facilities. The credit terms, including 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.
 
30 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

Our Euro-denominated notes have been designated as a hedge of our net investment in subsidiaries with a Euro-functional currency. Since our net investment in these subsidiaries exceeds the respective amount of the designated borrowings, all foreign exchange gains or losses related to these borrowings are included as a component of Accumulated Other Comprehensive Income (Loss). (See Significant Matters Affecting Results of Operations and Notes 8 and 13 to the Consolidated Financial Statements for further information.)
 
REVOLVING CREDIT AGREEMENT
 
We have a $400.0 million revolving credit agreement (the “credit agreement”) with a syndicate of commercial banks that expires November 2012. The credit agreement allows for borrowings in various currencies and up to $150.0 million may be used for the issuance of standby letters of credit.
 
On October 16, 2009, we amended our revolving credit agreement to revise certain terms and financial covenants. The amended revolving credit agreement (“Amended Revolving Credit Agreement”) reduced the size of the facility from $625.0 million to $400.0 million. In addition, the Amended Revolving Credit Agreement requires that we comply with maximum Debt-to-EBITDA ratios, ranging from 3.25 to 1 to 6.00 to 1 beginning with the quarter ended September 30, 2009 through the quarter ending June 30, 2011, returning to a ratio of 3.25 to 1 for the quarter ending September 30, 2011 and each quarter thereafter. The Amended Revolving Credit Agreement also requires that we comply with minimum Fixed Charge Coverage ratios, ranging from 1.25 to 1 to 2.00 to 1 beginning with the quarter ended September 30, 2009 through the quarter ending December 31, 2011, returning to a ratio of 2.0 to 1 for the quarter ending March 31, 2012 and each quarter thereafter.
 
As defined in the Amended Revolving Credit Agreement, we had a Debt-to-EBITDA ratio of 3.64 to 1 (compared to a maximum allowable ratio of 5.25 to 1) as of December 31, 2009 and a Fixed Charge Coverage ratio of 1.55 to 1 (compared to a minimum required ratio of 1.25 to 1) as of December 31, 2009. Based on our current forecast, we expect to be in compliance with our financial covenants for the next 12 months.
 
Under our Amended Revolving Credit Agreement, we have a ratings-based pricing grid which determines the facility fee and the credit spread that we add to the applicable interbank borrowing rate on all borrowings. At our current credit ratings, the facility fee is 45 bps, and the credit spread is 255 bps. Any further downgrades from the credit agencies would unfavorably impact our facility fees and result in additional costs ranging from approximately $0.6 million to $1.3 million annually. As of December 31, 2009, the interest rate under the agreement was Libor plus 2.55% (for U.S. Dollar borrowings, or alternative base rate for foreign currency borrowings).
 
On October 16, 2009, we repaid the €100.0 million ($146.4 million) borrowings outstanding under our Amended Revolving Credit Agreement, and terminated the related interest rate swap agreements. As a result, we incurred approximately $7.5 million in fees classified as interest expense, which was recorded in the third quarter ended September 30, 2009. We have no borrowings under this credit agreement as of December 31, 2009. (See Significant Matters Affecting Results of Operations for further information.)
 
Outstanding letters of credit issued under the credit agreement totaled $8.6 million and $3.8 million as of December 31, 2009 and 2008, respectively. Additional borrowings of $391.4 million were available to us under the credit agreement as of December 31, 2009, however total additional borrowings under all facilities would be limited to $334.3 million at December 31, 2009 by the financial covenants.
 
ACCOUNTS RECEIVABLE SECURITIZATION
 
One of our wholly-owned U.S. subsidiaries had an agreement to transfer to a third party, on an ongoing basis, an interest in up to $100.0 million of its accounts receivable. In June 2009, we terminated this program, which would have expired in July 2009, as we did not anticipate a need for this liquidity and anticipated a significant increase in associated fees and borrowing costs. The terms of this agreement were such that transfers did not qualify as a sale of accounts receivable. Accordingly, any advances under this agreement were reflected as debt on the consolidated balance sheets.
 
The interest rate for the facility was variable and tied to A1+/P1 rated commercial paper. In 2009 and 2008, the average interest rate was 1.8% and 3.1%, respectively, and we made total interest payments of $0.1 million and $0.9 million, respectively. As of December 31, 2008, there were borrowings of $64.0 million outstanding under this program at an interest rate of 2.4%, which were recorded as current maturities of long-term debt. These borrowings were repaid in March 2009.
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 31
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
OTHER
 
In addition to the previously mentioned facilities, we maintain separate bank credit lines with financial institutions to meet working capital needs of our subsidiary operations. As of December 31, 2009, such uncommitted credit lines totaled $408.4 million, of which $367.1 million was unused. Under the credit agreement, total subsidiary borrowings cannot exceed $300.0 million in the first, second and fourth quarters, and $600.0 million in the third quarter of each year. Due to these limitations, additional borrowings of $257.7 million could have been made under these lines as of December 31, 2009.
 
In August 2009, our credit rating from Moody’s Investors Services was downgraded from Baa2 with a negative outlook to Baa3 with a stable outlook. Our credit rating from Standard and Poor’s is BBB- with a negative outlook. The rating agencies use 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.
 
Application Of Critical Accounting Policies
 
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts. A discussion of the more significant estimates follows. Management has discussed the development, selection and disclosure of these estimates and assumptions with the Audit Committee of our Board of Directors.
 
ALLOWANCE FOR DOUBTFUL ACCOUNTS
 
We have an Allowance for Doubtful Accounts recorded as an estimate of the Accounts Receivable balance that may not be collected. This allowance is calculated on an entity-by-entity basis with consideration for historical write-off experience, the current aging of receivables and a specific review for potential bad debts. Items that affect this balance mainly include bad debt expense and write-offs of Accounts Receivable balances.
 
Bad Debt Expense, which increases our Allowance for Doubtful Accounts, is recorded as a Selling and Administrative Expense and was $27.8 million, $23.4 million and $21.8 million for 2009, 2008 and 2007, respectively. Factors that would cause this provision to increase primarily relate to increased bankruptcies by our clients and other difficulties collecting amounts billed. On the other hand, an improved write-off experience and aging of receivables would result in a decrease to the provision.
 
Write-offs, which decrease our Allowance for Doubtful Accounts, are recorded as a reduction to our Accounts Receivable balance and were $39.0 million, $21.5 million and $20.8 million for 2009, 2008 and 2007, respectively.
 
EMPLOYMENT-RELATED ITEMS
 
The employment of contingent workers and permanent staff throughout the world results in the recognition of liabilities related to defined benefit pension plans, self-insured workers’ compensation, social program remittances and payroll tax audit exposures that require us to make estimates and assumptions in determining the proper reserve levels. These reserves involve significant estimates or judgments that are material to our financial statements.
 
Defined Benefit Pension Plans
 
We sponsor several qualified and nonqualified pension plans covering permanent employees. The most significant plans are located in the U.S., France, the United Kingdom and other European countries. Annual expense relating to these plans is recorded as Selling and Administrative Expense and is estimated to be approximately $9.9 million in 2010, compared to $6.7 million, $15.5 million and $19.2 million in 2009, 2008 and 2007, respectively. A relatively lower expense is recognized subsequent to 2008 as we terminated our Japanese plan in January 2009 and replaced it with a defined contribution plan. The termination resulted in a curtailment and settlement gain of $4.3 million in 2009, which decreased the 2009 expense.
 
The calculations of annual pension expense and the pension liability required at year-end include various actuarial assumptions such as discount rates, expected rate 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 of the measurement date. We review the actuarial assumptions on an annual basis and make modifications to the assumptions as necessary. We review peer data and historical rates, on a country-by-country basis, to check for reasonableness in setting both the discount rate and the expected return on plan assets. We estimate compensation increases and employee turnover rates for each plan based on the historical rates and the expected future rates for each respective country. Changes to any of these assumptions will impact the level of annual expense recorded related to the plans.
 
32 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

We used a weighted-average discount rate of 5.7% for the U.S. plans and 5.5% for the non-U.S. plans in determining the estimated pension expense for 2010. These rates compare to the 6.4% and 5.2% weighted-average discount rates for the U.S. plans and non-U.S. plans, respectively, used in determining the estimated pension expense for 2009, and reflect the current interest rate environment. Absent any other changes, a 25 basis point change in the weighted-average discount rate would impact 2010 consolidated pension expense by approximately $1.0 million for the non-U.S. plans. The change would have a minimal impact for the U.S. plans. We have selected a weighted-average expected return on plan assets of 7.3% for the U.S. plans and 5.7% for the non-U.S. plans in determining the estimated pension expense for 2010. The comparable rates used for the calculation of the 2009 pension expense were 7.5% and 5.4% for the U.S. plans and non-U.S. plans, respectively. A 25 basis point change in the weighted-average expected return on plan assets would impact 2010 consolidated pension expense by approximately $0.1 million for the U.S. plans and $0.5 million for the non-U.S plans. Changes to these assumptions have historically not been significant in any jurisdiction for any reporting period, and no significant adjustments to the amounts recorded have been required in the past or are expected in the future. (See Note 9 to the Consolidated Financial Statements for further information.)
 
U.S. Workers’ Compensation
 
In the U.S., we are self-insured in most states for workers’ compensation claims for our contingent workers. We determine the proper reserve balance using an actuarial valuation, which considers our historical payment experience and current employee demographics. Our reserve for such claims as of December 31, 2009 and 2008 was $71.3 million and $79.2 million, respectively. Workers’ compensation expense is recorded as a component of Cost of Services.
 
There are two main factors that impact workers’ compensation expense: the number of claims and the cost per claim. The number of claims is driven by the volume of hours worked, the business mix which reflects the type of work performed (for example, office and professional work have fewer claims than industrial work), and the safety of the environment where the work is performed. The cost per claim is driven primarily by the severity of the injury, related medical costs and lost-time wage costs. A 10% change in the number of claims or cost per claim would impact workers’ compensation expense in the U.S. by approximately $3.1 million.
 
Historically, we have not had significant changes in our assumptions used in calculating our reserve balance or significant adjustments to our reserve level. During 2009 we experienced a reduction in workers’ compensation expense, primarily as a result of our continued focus on safety, which includes training of contingent workers and client site reviews, and reduced volumes. Given our current claims experience and cost per claim, we do not expect a significant change in our workers’ compensation reserve in the near future. However, we have historically experienced an increase in the number of claims following a recessionary period. Should this pattern reoccur, we could potentially experience higher costs for a 2 to 3 year period starting in 2010.
 
Social Program Remittances and Payroll Tax Audit Exposure
 
On a routine basis, various governmental agencies in some of the countries in which we operate audit our payroll tax calculations and our compliance with other payroll-related regulations. These audits focus primarily on documentation requirements and our support for our payroll tax remittances. Due to the nature of our business, the number of people that we employ, and the complexity of some payroll tax regulations, we may have some adjustments to the payroll tax remittances as a result of these audits.
 
In particular, the French government has various social programs that are aimed at reducing the cost of labor and encouraging employment, particularly for low-wage workers, through the reduction of payroll taxes (or social contribution). Due to the number of new programs or program changes, and the complexity of compliance, we may have adjustments to the amount of reductions claimed as a result of the audits. During 2007, there was a change in the payroll tax calculation under certain French social programs, retroactive to January 1, 2006 and effective through September 30, 2007. During 2008, we learned that this same change was applicable to 2005. (See Note 1 to the Consolidated Financial Statements for further information.)
 
We make an estimate of the additional remittances that may be required on a country-by-country basis, and record the estimate as a component of Cost of Services or Selling and Administrative Expenses, as appropriate. Each country’s estimate is based on the results of past audits and the number of years that have not yet been audited, with consideration for changing business volumes and changes to the payroll tax regulations. To the extent that our actual experience differs from our estimates, we will need to make adjustments to our reserve balance, which will impact the results of the related operation and the operating segment in which it is reported. Other than France, we have not had any significant adjustments to the amounts recorded as a result of any payroll tax audits, and we do not expect any significant adjustments to the recorded amounts in the near term.
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 33
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
In France, we currently maintain a reserve for the unaudited years of 2007 through 2009, which has been estimated based on the results of past audits and changes in business volumes. We do not expect any significant adjustments to the recorded amount in the near term, however we are currently under audit for 2007 and 2008.
 
DEFERRED REVENUE
 
We recognize revenue under the current accounting guidance on revenue recognition. The accounting guidance generally provides that revenue for time-based services be recognized over the average length of the services being provided. For the outplacement line of business, we recognize revenue from individual programs over the estimated period in which services are rendered to candidates. For large projects within the outplacement line of business, we recognize revenue over the period in which the services are provided. In 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.
 
The amount billed for outplacement, consulting services and performance-based contracts in excess of the amount recognized as revenue is recorded as Deferred Revenue and included in Accrued Liabilities for the current portion and Other Long-Term Liabilities for the long-term portion in our Consolidated Balance Sheets.
 
Significant factors impacting Deferred Revenue are the type of programs and projects sold and the volume of current billings for new programs and projects. Over time, an increasing volume of new billings will generally result in higher amounts of Deferred Revenue, while decreasing levels of new billings will generally result in lower amounts of Deferred Revenue. As of December 31, 2009 and 2008, the current portion of Deferred Revenue was $54.3 million and $57.4 million, respectively, and the long-term portion of Deferred Revenue was $25.2 million and $27.5 million, respectively.
 
INCOME TAXES
 
We account for income taxes in accordance with the accounting guidance on income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We record a valuation allowance against deferred tax assets for which utilization of the asset is not likely.
 
The accounting guidance related to uncertain tax positions requires an evaluation process for all tax positions taken that involves a review of probability for sustaining a tax position. If the probability for sustaining a tax position is more likely than not, which is a 50% threshold, then the tax position is warranted and the largest amount that would be realized upon ultimate settlement is recognized. An uncertain tax position will not be recognized in the financial statements unless it is more likely than not of being sustained.
 
Our judgment is required in determining our deferred tax assets and liabilities, and any valuation allowances recorded. Our net deferred tax assets may need to be adjusted in the event that tax rates are modified, or our estimates of future taxable income change, such that deferred tax assets or liabilities are expected to be recovered or settled at a different tax rate than currently estimated. In addition, valuation allowances may need to be adjusted in the event that our estimate of future taxable income changes from the amounts currently estimated. We have unrecognized tax benefits related to items in various countries. To the extent these items are settled for an amount different than we currently expect, the unrecognized tax benefit will be adjusted.
 
We provide for income taxes on a quarterly basis based on an estimated annual tax rate. In determining this rate, we make estimates about taxable income for each of our largest locations worldwide, as well as the tax rate that will be in effect for each location. To the extent these estimates change during the year, or actual results differ from these estimates, our estimated annual tax rate may change between quarterly periods and may differ from the actual effective tax rate for the year.
 
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSET IMPAIRMENT
 
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 during the third quarter, or more frequently if events or circumstances change that would more likely than not reduce the fair value of our reporting units below their carrying value.
 
34 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

We performed our annual impairment test of our goodwill and indefinite-lived intangible assets during the third quarter of 2009 and 2008, which resulted in non-cash impairment charge of $61.0 million in 2009 for goodwill associated with our Jefferson Wells reporting unit and $163.1 million in 2008 for goodwill ($140.8 million) and tradename ($22.3 million) associated with our Right Management reporting unit. We also recorded an $8.5 million deferred tax asset related to the tradename impairment in 2008.
 
The 2009 impairment was due in part to continued deterioration in market conditions, which has resulted in Jefferson Wells experiencing a significant revenue decline during the current year as compared to the prior year. The discount rate was also impacted unfavorably by a 1% increase to our equity risk premium as a result of current market conditions and economic uncertainty.
 
The 2008 impairment was a result of deteriorating market conditions and general economic uncertainty. Market comparables and forecasted cash flows for the Right Management reporting unit were lower than in previous years, which led to a determination that the goodwill 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 flow methodology. For certain of our reporting units, a combination of the income approach (weighted 75%) and the market approach (weighted 25%) derived from comparable public companies was utilized. The income approach is developed from management’s forecasted cash flow data. Therefore, it represents an indication of fair market value reflecting management’s internal outlook for the reporting unit. The market approach utilizes the Guideline Public Company Method to quantify the respective reporting unit’s fair value based on revenue and earnings multiples realized by similar public companies. The market approach is more volatile as an indicator of fair value as compared to the income approach. We believe that each approach has its merits. However in the instances where we have utilized both approaches, we have weighted the income approach more heavily than the market approach because we believe that management’s assumptions generally provide greater insight into the reporting unit’s fair value.
 
Significant assumptions used in our annual goodwill impairment test during the third quarter of 2009 included: expected revenue growth rates, operating unit profit margins, and working capital levels; discount rates ranging from 10.7% to 22.2%; and a terminal value multiple. The discount rate was impacted unfavorably by a 1% increase to our equity risk premium as a result of current market conditions and economic uncertainty. The expected future revenue growth rates were determined after taking into consideration our historical revenue growth rates, our assessment of future market potential, our expectations of future business performance as well as an assumed modest economic recovery beginning in the middle of 2010.
 
The table below provides select 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, 2009. Only those reporting units that have a significant amount of goodwill have been included. As noted in the table below, a 1% reduction in earnings and revenue growth rates would result in two of our reporting units, U.S. and Elan, having projected fair values less than their respective carrying values. Hence, if we were to experience further economic contraction within these reporting units or other reporting units, we may have to record a material impairment charge in future periods. We have also included the sensitivity analysis of the estimated fair values as follows:
 
    Right       United           Netherlands       Jefferson  
(in millions)   Management     States     Elan     (Vitae)      Wells  
Estimated fair values $  614.3   $  444.2   $  343.1   $  206.0   $  148.8  
Carrying values   475.5     340.2     252.1     58.1     92.9  
Sensitivity of estimated fair values:                              
Estimated fair values in the event of a 1% reduction in earnings and revenue growth rates
  522.8     285.2     220.1     165.8     124.1  
Estimated fair value in the event of a 1% increase in the market participant discount rate
  558.4     393.6     304.7     181.6     136.3  
 
If the reporting unit’s fair value is less than its carrying value, as was the case for Jefferson Wells in 2009 and Right Management in 2008, we are required to perform a second step. In the second step, we allocate the fair value of the reporting unit to all of the assets and liabilities of the reporting unit, including any unrecognized intangibles assets, in a “hypothetical” calculation to determine the implied fair value of the goodwill. The impairment charge, if any, is measured as the difference between the implied fair value of the goodwill and its carrying value.
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 35
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
Under the current accounting guidance, we are also required to test our indefinite-lived intangible assets for impairment by comparing the fair value of the intangible asset with its carrying value. If the intangible asset’s fair value is less than its carrying value, an impairment loss is recognized for the difference. There was no significant impairment of our indefinite-lived intangible assets recorded in 2009.
 
We did not perform an interim impairment test of our goodwill and indefinite-lived intangible assets in the fourth quarter of 2009 as we noted no significant indicators of impairment as of December 31, 2009.
 
The goodwill and intangible asset impairment charge is non-cash in nature and does 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 RatesOur 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 U.S. Dollar value of our reported earnings, our investments in the subsidiaries and the intercompany transactions with the subsidiaries.
 
Approximately 87% of our revenues and profits are generated outside of the U.S., with approximately 49% 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 U.S. Dollar, particularly the Euro, may have a significant impact on our reported results. Revenues and expenses denominated in foreign currencies are translated into U.S. Dollars at the monthly weighted-average exchange rates for the year. Consequently, as the value of the U.S. Dollar changes relative to the currencies of our major markets, our reported results vary.
 
Throughout 2009, the U.S. Dollar was volatile against many of the currencies of our major markets. Revenues from Services and Operating Profit in constant currency were approximately 4.6% and 0.2% higher than reported. If the U.S. Dollar had strengthened an additional 10% during 2009, Revenues from Services would have decreased by approximately 8.7% and Operating Profit would have decreased by approximately 17.0% from the amounts reported.
 
Fluctuations in currency exchange rates also impact the U.S. Dollar amount of our Shareholders’ Equity. The assets and liabilities of our non-U.S. subsidiaries are translated into U.S. 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 (Loss). The U.S. Dollar weakened relative to many foreign currencies as of December 31, 2009 compared to December 31, 2008. Consequently, Shareholders’ Equity increased by $107.0 million as a result of the foreign currency translation during the year. If the U.S. Dollar had weakened an additional 10% as of December 31, 2009, resulting translation adjustments recorded in Shareholders’ Equity would have increased by approximately $288.7 million from the amounts reported.
 
Although currency fluctuations impact our reported results and Shareholders’ Equity, such fluctuations generally do not affect our cash flow or result in actual economic gains or losses. Substantially all of our subsidiaries derive revenues and incur expenses within a single country and, consequently, do not generally incur currency risks in connection with the conduct of their normal business operations. We generally have few cross-border transfers of funds, except for transfers to the U.S. for payment of license fees and interest expense on intercompany loans, working capital loans made between the U.S. and our foreign subsidiaries, dividends from our foreign subsidiaries, and payments between certain countries for services provided. To reduce the currency risk related to these transactions, we may borrow funds in the relevant foreign currency under our revolving credit agreement or we may enter into a forward contract to hedge the transfer.
 
As of December 31, 2009, there were £7.4 million ($12.0 million) of net forward contracts that relate to cash flows owed to our foreign subsidiaries in 2010. In addition, there were €6.9 million ($9.9 million) of net forward contracts outstanding relating to the interest due on our €200.0 million Notes and €300.0 million Notes in June 2010. Our forward contracts are not designated as hedges. Consequently, any gain or loss resulting from the change in fair value is recognized in the current period earnings.
 
As of December 31, 2009, we had $714.6 million of long-term borrowings denominated in Euros (€500.0 million) which have been designated as a hedge of our net investment in subsidiaries with the Euro-functional currency. Since our net investment in these subsidiaries exceeds the respective amount of the designated borrowings, all translation gains or losses related to these borrowings are included as a component of Accumulated Other Comprehensive Income (Loss). Shareholders’ Equity increased by $15.1 million, net of tax, due to changes in Accumulated Other Comprehensive Income (Loss) during the year due to the currency impact on these borrowings.
 
36 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

On January 7, 2010, Venezuela’s National Consumer Price Index for December 2009 was released, which noted that the cumulative three-year inflation rates for both of Venezuela’s inflation indices were over 100%. Under the current accounting guidance, since the country’s economy is considered highly inflationary, the functional currency of the foreign entity (Bolivar Fuerte) must be remeasured to the functional currency of the reporting entity (U.S. Dollar) effective January 1, 2010.
 
In addition, the Venezuela government announced on January 8, 2010 that it was devaluing their currency in half as compared to the U.S. Dollar. As a result, we will be unfavorably impacted by these events during our first quarter of 2010. We do not expect this impact to be material.
 
Interest Rates Our exposure to market risk for changes in interest rates relates primarily to our variable rate long-term debt obligations. We have historically managed interest rates through the use of a combination of fixed- and variable-rate borrowings and interest rate swap agreements. As of December 31, 2009, we had the following fixed- and variable-rate borrowings:
 
          Weighted-  
          Average  
(in millions)   Amount     Interest Rate(1 )
Variable $  41.3     8.10%  
Fixed   716.0     4.56%  
Total $  757.3     4.75%  
(1) The rates are impacted by currency exchange rate movements.
 
Prior to the fourth quarter of 2009, we had various interest rate swap agreements in order to fix our interest costs on our €100.0 million Euro-denominated variable rate borrowings. We repaid the borrowings and terminated the related interest rate swap agreements in the fourth quarter of 2009.
 
Sensitivity Analysis The following table summarizes our debt and derivative instruments that are sensitive to foreign currency exchange rate and interest rate movements. All computations below are based on the U.S. Dollar spot rate as of December 31, 2009. The exchange rate computations assume a 10% appreciation or 10% depreciation of the Euro and British Pound to the U.S. Dollar.
 
The hypothetical impact on 2009 earnings and Accumulated Other Comprehensive Income (Loss) of the stated change in rates is as follows:
 
          Movements In  
(in millions)         Exchange Rates  
Market Sensitive Instrument   10% Depreciation     10% Appreciation  
Euro notes:            
€200, 4.86% Notes due June 2013
$  28.6 (1) $  (28.6 )(1)
€300, 4.58% Notes due June 2012
  43.0 (1)   (43.0 )(1)
Forward contracts:            
$9.9 to €6.9
  (1.0 )   1.0  
$12.0 to £7.4
  (1.2 )   1.2  
  $  69.4   $  (69.4 )
(1) Exchange rate movements are recorded through Accumulated Other Comprehensive Income (Loss) as these instruments have been designated as an economic hedge of our net investment in subsidiaries with a Euro functional currency.
 
The hypothetical changes in the fair value of our market sensitive instruments due to changes in interest rates, and changes in foreign currency exchange rates for the foreign contracts, are as follows:
 
(in millions)            
Market Sensitive Instrument   10% Decrease     10% Increase  
Fixed rate debt:            
€200, 4.86% Notes due June 2013
$  28.4 (1) $  (28.4 )(1)
€300, 4.58% Notes due June 2012
  43.3 (1)   (43.3 )(1)
Forward contacts:            
$9.9 to €6.9 
  (1.0 )   1.0  
$12.0 to £7.4
  (1.2 )   1.2  
(1) This change in fair value is not recorded in the Consolidated Financial Statements, however disclosure of the fair value is included in Note 1 to the Consolidated Financial Statements.
 
Management’s Discussion & Analysis      Manpower 2009 Annual Report 37
 

Management’s Discussion & Analysis
of financial condition and results of operations
 
IMPACT OF ECONOMIC CONDITIONS
 
One of the principal attractions of using employment services providers is to maintain a flexible supply of labor to meet changing economic conditions. Therefore, the industry has been, and remains sensitive to, economic cycles. To help minimize the effects of these economic cycles, we offer clients a continuum of services to meet their needs throughout the employment and business cycle. We believe that the breadth of our operations and the diversity of our service mix cushion us against the impact of an adverse economic cycle in any single country or industry. However, adverse economic conditions in any of our largest markets, or in several markets simultaneously, would have a material impact on our consolidated financial results.
 
LEGAL REGULATIONS
 
The employment services industry is closely regulated in all of the major markets in which we operate except the U.S. and Canada. Many countries impose licensing or registration requirements and substantive restrictions on employment services, either on the provider of recruitment services or the ultimate client company, or minimum benefits to be paid to the temporary employee either during or following the temporary assignment. Regulations also may restrict the length of assignments, the type of work permitted or the occasions on which contingent workers may be used. Changes in applicable laws or regulations have occurred in the past and are expected in the future to affect the extent to which employment services firms may operate. These changes could impose additional costs, taxes, record keeping or reporting requirements; restrict the tasks to which contingent workers may be assigned; limit the duration of or otherwise impose restrictions on the nature of the relationship (with us or the client); or otherwise adversely affect the industry. All of our other service lines are currently not regulated.
 
In many markets, the existence or absence of collective bargaining agreements with labor organizations has a significant impact on our operations and the ability of clients to utilize our services. In some markets, labor agreements are structured on a national or industry-wide (rather than a company-by-company) basis. Changes in these collective bargaining agreements have occurred in the past, are expected to occur in the future, and may have a material impact on the operations of employment services firms, including us.
 
In November 2004, French authorities commenced an investigation at our French headquarters. According to the search warrant, the investigation stemmed from a complaint submitted during 2003 to the European Commission and subsequently transferred to France’s Direction Generale de la Concurrence, de la Consommation et de la Repression des Fraudes (“DGCCRF”), a body of the French Finance Minister that investigates frauds and competition violations. This investigation led the DGCCRF to transmit the results of its inquiry to the French Competition Council. In November 2007, we received a Statement of Objections from the Competition Council alleging illegal information sharing between us and certain of our competitors. We responded to this Statement of Objections in February 2008, defending our position.
 
In June 2008, we received a Report from the Competition Council, which was prepared by the case handler for the Competition Council and opened the second phase of the procedure before the Competition Council. The Report rejected all of the defense arguments we made in our initial response and maintained the objections as set forth in the Statement of Objections. It also provided the Competition Council with the elements for the calculation of fines, including the case handler’s estimation of our portion of the alleged damage to the economy.
 
We responded to the June 2008 Report in August 2008, providing further arguments and information in defense of our position and providing our own estimation of the alleged damage to the economy. A hearing on the matter before the Competition Council was held in October 2008.
 
After considering the input that was provided, the Competition Council rendered its decision in the matter in February 2009 and levied a fine of €42.0 million ($55.9 million) based on the Competition Council’s determination of the damage to the economy attributable to the alleged misconduct, with adjustment for aggravating or mitigating factors. We had accrued for this as of December 31, 2008, paid this fine in April 2009 and appealed the Competition Council’s decision. In January 2010, we received notification that our appeal was denied. We are currently assessing whether to take any further action.
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
In December 2007, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on retirement benefits. The new guidance requires additional disclosures about plan assets of a defined benefit pension or other postretirement plan. We adopted the guidance as of December 31, 2009. See Note 9 to the Consolidated Financial Statements for the disclosure.
 
In December 2007, the FASB issued new accounting guidance on business combinations. The new guidance changes the requirements for an acquirer’s recognition and measurement of the assets acquired and the liabilities assumed in a business combination. We adopted the guidance effective January 1, 2009. There was no material impact of this adoption on our Consolidated Financial Statements.
 
38 Manpower 2009 Annual Report     Management’s Discussion & Analysis
 

In March 2008, the FASB issued new accounting guidance on derivatives and hedging. The new guidance requires enhanced disclosures about derivative instruments and hedging activities to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. We adopted the guidance as of January 1, 2009. See Note 13 to the Consolidated Financial Statements for the disclosure.
 
In May 2009, the FASB issued new accounting guidance on subsequent events. The new guidance requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. We adopted the guidance effective for the second quarter of 2009. See Note 1 to the Consolidated Financial Statements for the disclosure.
 
In June 2009, the FASB issued new accounting guidance on transfers of financial assets. The new guidance eliminates the concept of a qualifying special-purpose entity and removes the exception from applying the current guidance for consolidation of variable interest entities to qualifying special purpose entities. The new guidance also defines the term participating interest to establish specific conditions for reporting a transfer of a portion of a financial asset as a sale. The Statement also requires that a transferor recognize and initially measure at fair value all assets obtained and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The guidance will be effective for us in 2010. We do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.
 
In June 2009, the FASB issued new accounting guidance on consolidation of variable interest entities. The new guidance amends the process for identifying the primary beneficiary in variable interest entities and requires ongoing assessments for purposes of identifying the primary beneficiary. The new guidance will be effective for us in 2010. We do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.
 
In October 2009, the FASB issued new accounting guidance on multiple-deliverable revenue arrangements. The new guidance amends the criteria for separating deliverables as well as how to measure and allocate consideration for multiple arrangements. The guidance also expands the disclosures related to a vendor’s multiple-deliverable revenue arrangements. The new guidance will be effective prospectively for our revenue arrangements entered into or materially modified in 2011. We are currently assessing the impact of the adoption of this guidance.
 
FORWARD-LOOKING STATEMENTS
 
Statements made in this annual report that are not statements of historical fact are forward-looking statements. All forward-looking statements involve risks and uncertainties. The information under the heading “Forward-Looking Statements” in our annual report on Form 10-K for the year ended December 31, 2009, which information is incorporated herein by reference, provides cautionary statements identifying, for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, important factors that could cause our actual results to differ materially from those contained in the forward-looking statements. Some or all of the factors identified in our annual report on Form 10-K may be beyond our control. Forward-looking statements can be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “may,” “believe,” “seek,” “estimate,” and similar expressions. We caution that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statements to reflect subsequent events or circumstances.
 
Management Report On Internal Control Over Financial Reporting
 
We are responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance to management and the Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Under the supervision and with the participation of management, including our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on our evaluation we have concluded that our internal control over financial reporting was effective as of December 31, 2009.
 
February 19, 2010
 
Management’s Discussion & Analysis     Manpower 2009 Annual Report 39
 

Report Of Independent Registered Public Accounting Firm
 
To The Board Of Directors And Shareholders Of Manpower Inc.:
 
We have audited the accompanying consolidated balance sheets of Manpower Inc. and subsidiaries (the “Company”) as of December 31, 2009 and 2008 and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits 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 about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2010 expressed an unqualified opinion on the Company’s internal control over financial reporting.
 
 
Milwaukee, Wisconsin
February 19, 2010
 
40 Manpower 2009 Annual Report     Report of Independent Registered Public Accounting Firm
 

Report Of Independent Registered Public Accounting Firm
 
To The Board Of Directors And Shareholders Of Manpower Inc.:
 
We have audited the internal control over financial reporting of Manpower Inc. and subsidiaries (the “Company”) as of December 31, 2009, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an 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 about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the COSO.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2009 of the Company and our report dated February 19, 2010 expressed an unqualified opinion on those financial statements.
 
 
Milwaukee, Wisconsin
February 19, 2010
 
Report of Independent Registered Public Accounting Firm     Manpower 2009 Annual Report 41
 

Consolidated Statements of Operations
in millions, except per share data
 
Year Ended December 31   2009     2008     2007  
Revenues from services $  16,038.7   $  21,537.1   $  20,486.1  
Cost of services
  13,220.5     17,450.2     16,651.7  
Gross profit   2,818.2     4,086.9     3,834.4  
Selling and administrative expenses
  2,715.5     3,430.3     3,023.2  
Goodwill and intangible asset impairment charges
  61.0     163.1      
Selling and administrative expenses   2,776.5     3,593.4     3,023.2  
Operating profit   41.7     493.5     811.2  
Interest and other expenses
  64.6     50.9     34.2  
(Loss) earnings before income taxes   (22.9 )   442.6     777.0  
Provision for income taxes
  (13.7 )   237.1     303.3  
Net (loss) earnings $  (9.2 ) $  205.5   $  473.7  
Net (loss) earnings per share - basic $  (0.12 ) $  2.61   $  5.70  
Net (loss) earnings per share - diluted $  (0.12 ) $  2.58   $  5.60  
Weighted average shares - basic   78.3     78.7     83.1  
Weighted average shares - diluted   78.3     79.7     84.6  
 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
 
42 Manpower 2009 Annual Report     Consolidated Statements of Operations
 

Consolidated Balance Sheets
in millions, except share and per share data
 
December 31   2009     2008  
ASSETS
           
Current Assets            
Cash and cash equivalents $  1,014.6   $  874.0  
Accounts receivable, less allowance for doubtful accounts of $118.3 and $118.5, respectively   3,070.8     3,629.7  
Prepaid expenses and other assets   179.6     119.9  
Future income tax benefits   67.4     66.5  
Total current assets
  4,332.4     4,690.1  
Other Assets            
Goodwill   959.1     972.9  
Intangible assets, less accumulated amortization of $100.5 and $78.4, respectively   398.4     415.2  
Other assets   347.5     330.6  
Total other assets
  1,705.0     1,718.7  
Property and Equipment            
Land, buildings, leasehold improvements and equipment   703.6     744.0  
Less: accumulated depreciation and amortization   527.2     530.6  
Net property and equipment   176.4     213.4  
Total assets
$  6,213.8   $  6,622.2  
LIABILITIES AND SHAREHOLDERS’ EQUITY
           
Current Liabilities            
Accounts payable $  944.4   $  896.3  
Employee compensation payable   187.8     213.2  
Accrued liabilities   465.9     585.7  
Accrued payroll taxes and insurance   572.0     617.5  
Value added taxes payable   391.2     479.2  
Short-term borrowings and current maturities of long-term debt   41.7     115.6  
Total current liabilities
  2,603.0     2,907.5  
Other Liabilities            
Long-term debt   715.6     837.3  
Other long-term liabilities   358.7     418.0  
Total other liabilities
  1,074.3     1,255.3  
Shareholders’ Equity            
Preferred stock, $.01 par value, authorized 25,000,000 shares, none issued        
Common stock, $.01 par value, authorized 125,000,000 shares, issued 104,397,965 and 103,756,138 shares, respectively
  1.0     1.0  
Capital in excess of par value   2,544.2     2,514.8  
Retained earnings   1,109.6     1,176.8  
Accumulated other comprehensive income (loss)   106.9     (8.9 )
Treasury stock at cost, 25,821,405 and 25,791,941 shares, respectively   (1,225.2 )   (1,224.3 )
Total shareholders’ equity
  2,536.5     2,459.4  
Total liabilities and shareholders’ equity
$  6,213.8   $  6,622.2  
 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
 
Consolidated Balance Sheets      Manpower 2009 Annual Report 43
 

Consolidated Statements of Cash Flows
in millions
 
Year Ended December 31   2009     2008     2007  
Cash Flows from Operating Activities                  
Net (loss) earnings $  (9.2 ) $  205.5   $  473.7  
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
                 
Depreciation and amortization
  97.2     107.1     99.0  
Non-cash goodwill and intangible asset impairment charges
  61.0     163.1      
Deferred income taxes
  (29.2 )   (32.8 )   22.2  
Provision for doubtful accounts
  27.8     23.4     21.8  
Loss from sale of an equity investment
  10.3          
Share-based compensation
  17.5     21.1     26.0  
Excess tax benefit on exercise of stock options
  (0.5 )   (0.5 )   (4.6 )
Change in operating assets and liabilities, excluding the impact of acquisitions:
                 
Accounts receivable
  663.6     575.0     (316.0 )
Other assets
  (71.5 )   2.9     (3.5 )
Other liabilities
  (352.7 )   (272.8 )   113.6  
Cash provided by operating activities
  414.3     792.0     432.2  
Cash Flows from Investing Activities                  
Capital expenditures   (35.1 )   (93.1 )   (91.6 )
Acquisitions of businesses, net of cash acquired   (21.6 )   (242.0 )   (122.8 )
Proceeds from the sale of an equity investment   13.3          
Proceeds from the sale of property and equipment   3.6     5.9     12.9  
Cash used in investing activities
  (39.8 )   (329.2 )   (201.5 )
Cash Flows from Financing Activities                  
Net change in short-term borrowings   (14.6 )   16.0     6.1  
Proceeds from long-term debt   146.5     233.7     1.0  
Repayments of long-term debt   (359.3 )   (170.7 )   (2.2 )
Proceeds from stock option and purchase plans   14.2     12.2     35.0  
Excess tax benefit on exercise of stock options   0.5     0.5     4.6  
Repurchases of common stock       (125.4 )   (419.2 )
Dividends paid   (58.0 )   (58.1 )   (57.1 )
Cash used in financing activities
  (270.7 )   (91.8 )   (431.8 )
Effect of exchange rate changes on cash   36.8     (34.5 )   50.7  
Net increase (decrease) in cash and cash equivalents   140.6     336.5     (150.4 )
Cash and cash equivalents, beginning of year   874.0     537.5     687.9  
Cash and cash equivalents, end of year $  1,014.6   $  874.0   $  537.5  
Supplemental Cash Flow Information                  
Interest paid $  62.0   $  64.8   $  50.5  
Income taxes paid $  75.2   $  293.5   $  248.5  
 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
 
44 Manpower 2009 Annual Report     Consolidated Statements of Cash Flows
 

Consolidated Statements of Shareholders’ Equity
in millions, except share and per share data
 
 
                          Accumulated              
 
  Common Stock     Capital in           Other              
 
              Excess     Retained     Comprehensive              
 
  Shares issued     Par Value     of Par Value     Earnings     Income (Loss)     Treasury Stock     Total  
Balance, January 1, 2007
  102,606,425   $  1.0   $  2,420.7   $  617.0   $  120.6   $  (685.1 ) $  2,474.2  
Comprehensive Income: