ManpowerGroup

Results of Operations

(In millions, except per share data)

Three Months Ended March 31

% Variance

Amount

Constant

2014

2013

Reported

Currency

(Unaudited)

Revenues from services (a)

$4,904.0

$4,768.9

2.8%

3.0%

Cost of services 

4,087.5

3,978.8

2.7%

2.9%

  Gross profit

816.5

790.1

3.3%

3.6%

Selling and administrative expenses

689.6

735.7

-6.3%

-6.1%

  Operating profit

126.9

54.4

133.4%

134.6%

Interest and other expenses

9.2

11.5

-19.7%

  Earnings before income taxes

117.7

42.9

174.3%

175.5%

Provision for income taxes

47.6

19.0

150.6%

  Net earnings

$     70.1

$     23.9

193.2%

196.5%

Net earnings per share - basic

$     0.88

$     0.31

183.9%

Net earnings per share - diluted

$     0.86

$     0.31

177.4%

180.6%

Weighted average shares - basic

79.8

77.1

3.5%

Weighted average shares - diluted 

81.2

78.2

3.8%

(a)

Revenues from services include fees received from our franchise offices of $5.5 million and $5.3 million for the three months ended March 31, 2014 and 2013, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $256.6 million and $234.7 million for the three months ended March 31, 2014 and 2013, respectively.

ManpowerGroup

Operating Unit Results

(In millions)

Three Months Ended March 31

% Variance

Amount

Constant

2014

2013

Reported

Currency

(Unaudited)

Revenues from Services:

  Americas:

      United States  (b)

$   720.5

$   706.1

2.1%

2.1%

      Other Americas

350.6

386.9

-9.4%

3.6%

1,071.1

1,093.0

-2.0%

2.6%

  Southern Europe:

      France

1,217.3

1,145.2

6.3%

2.3%

      Italy

274.7

257.9

6.5%

2.5%

      Other Southern Europe

230.0

193.4

18.9%

14.7%

1,722.0

1,596.5

7.9%

3.8%

  Northern Europe

1,463.9

1,370.3

6.8%

4.6%

  APME

573.7

632.5

-9.3%

-1.1%

  Right Management 

73.3

76.6

-4.3%

-4.0%

$4,904.0

$4,768.9

2.8%

3.0%

Operating Unit Profit: (a)

  Americas:

      United States

$     13.4

$      7.4

81.2%

81.2%

      Other Americas

12.6

8.7

43.8%

64.6%

26.0

16.1

61.0%

72.2%

  Southern Europe:

      France

51.2

29.7

72.0%

65.0%

      Italy

12.6

11.7

7.8%

3.4%

      Other Southern Europe

4.6

2.3

97.5%

90.0%

68.4

43.7

56.2%

49.9%

  Northern Europe

38.4

10.6

261.4%

256.7%

  APME

20.2

14.8

38.1%

52.4%

  Right Management 

8.3

2.0

305.7%

303.8%

161.3

87.2

Corporate expenses

(26.2)

(24.4)

Intangible asset amortization expense

(8.2)

(8.4)

    Operating profit

126.9

54.4

133.4%

134.6%

Interest and other expenses (c)

(9.2)

(11.5)

    Earnings before income taxes

$   117.7

$     42.9

(a)

On a consolidated basis, the French business tax is reported in provision for income taxes, in accordance with the current accounting guidance on income taxes.  Prior to the second quarter of 2013, we internally reviewed the financial results of our French operations including the French business tax within OUP given the operational nature of these taxes.  While we continue to view this tax as operational, during the second quarter of 2013 we changed our internal reporting to exclude the French business tax from the OUP of our France reportable segment. Therefore, we are no longer required to show the business tax amount separately to reconcile to the consolidated results. All previously reported segment results have been restated to conform to the current year presentation. This change in segment reporting has no impact on our reporting of consolidated results.

(b)

In the United States, revenues from services include fees received from our franchise offices of $3.4 million and $3.2 million for the three months ended March 31, 2014 and 2013, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $169.1 million and $155.1 million for the three months ended March 31, 2014 and 2013, respectively.

(c)

The components of interest and other expenses were:

2014

2013

Interest expense

$      8.6

$     10.7

Interest income

(0.9)

(0.9)

Foreign exchange (gain) loss 

(1.2)

0.4

Miscellaneous expenses, net

2.7

1.3

$      9.2

$     11.5

ManpowerGroup

Consolidated Balance Sheets

(In millions)

Mar. 31

Dec. 31

2014

2013

(Unaudited)

ASSETS

Current assets:

  Cash and cash equivalents

$   696.5

$   737.6

  Accounts receivable, net

4,244.1

4,277.9

  Prepaid expenses and other assets

142.8

161.3

  Future income tax benefits

67.2

66.2

      Total current assets

5,150.6

5,243.0

Other assets:

  Goodwill and other intangible assets, net

1,411.4

1,400.0

  Other assets

557.2

479.3

      Total other assets

1,968.6

1,879.3

Property and equipment:

  Land, buildings, leasehold improvements and equipment

709.5

706.2

  Less:  accumulated depreciation and amortization

548.7

540.2

    Net property and equipment

160.8

166.0

        Total assets

$7,280.0

$7,288.3

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Accounts payable

$1,579.0

$1,523.9

  Employee compensation payable

184.3

230.4

  Accrued liabilities

561.3

536.1

  Accrued payroll taxes and insurance

578.0

680.7

  Value added taxes payable

476.4

502.5

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

45.4

36.0

      Total current liabilities

3,424.4

3,509.6

Other liabilities:

  Long-term debt

484.3

481.9

  Other long-term liabilities

395.5

382.6

      Total other liabilities

879.8

864.5

Shareholders' equity:

  Common stock

1.1

1.1

  Capital in excess of par value

3,032.6

3,014.0

  Retained earnings 

1,387.6

1,317.5

  Accumulated other comprehensive income

82.1

82.2

  Treasury stock, at cost

(1,527.6)

(1,500.6)

      Total shareholders' equity

2,975.8

2,914.2

        Total liabilities and shareholders' equity

$7,280.0

$7,288.3

ManpowerGroup

Consolidated Statements of Cash Flows

(In millions)

Three Months Ended

March 31

2014

2013

(Unaudited)

Cash Flows from Operating Activities:

  Net earnings

$  70.1

$  23.9

  Adjustments to reconcile net earnings to net

    cash provided by operating activities:

      Depreciation and amortization

21.6

24.2

      Deferred income taxes

(1.5)

2.7

      Provision for doubtful accounts

6.6

5.9

      Share-based compensation

10.8

6.5

      Excess tax benefit on exercise of share-based awards

(2.2)

(0.3)

  Changes in operating assets and liabilities, excluding

    the impact of acquisitions:

      Accounts receivable

27.8

20.2

      Other assets

(55.8)

(17.1)

      Other liabilities

(92.9)

(128.3)

            Cash used in operating activities

(15.5)

(62.3)

Cash Flows from Investing Activities:

  Capital expenditures

(8.3)

(12.8)

  Acquisitions of businesses, net of cash acquired

(9.4)

-

  Proceeds from sales of property and equipment

-

0.6

            Cash used in investing activities

(17.7)

(12.2)

Cash Flows from Financing Activities:

  Net change in short-term borrowings

13.3

2.2

  Repayments of long-term debt

(0.6)

(0.3)

  Proceeds from share-based awards

6.0

10.2

  Other share-based award transactions, net

(8.2)

1.0

  Repurchases of common stock

(16.7)

-

            Cash (used in) provided by financing activities

(6.2)

Effect of exchange rate changes on cash

(1.7)

(3.3)

Change in cash and cash equivalents

(41.1)

(64.7)

Cash and cash equivalents, beginning of period

737.6

648.1

Cash and cash equivalents, end of period

$696.5

$583.4