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Europe — Manpower to acquire Comsys and announces Q4 results

03 February 2010

Manpower Inc. (NYSE:MAN), has announced a fall in fourth quarter 2009 revenues of 3.9% to $4.4 billion. Revenues fell by 11.6% on a constant currency basis.

Net earnings in Q4 2009 were down by -61.8% to $29.1 million from $76 million in Q4 2008. On a constant currency basis Q4 2009 net earnings were down by -70.8%.

Included in the fourth quarter results is a $12.7 million ($9.0 million after tax) reorganisation charge, primarily related to office closures and consolidations, and severance costs. The Company also disclosed that it had prematurely recognized revenue related to a workforce solutions contract in 2007, 2008 and the 9 month period ended 30 September 30 2009. As a result, operating results were restated for each period resulting in a reduction of revenues and operating profit of $14.2 million, $15.7 million and $9.7 million.

Gross margins declined from 20.7% in Q4 2008 to 17.1% in Q4 2009 with a 1.9% decline in temporary recruitment gross margin.

In France revenues fell by -3.5% from $1.35 billion in Q4 2008 to $1.30 billion in Q4 2009. Operating profits in France were down sharply by -95.4% from $109.1 million to $5 million.
In Italy revenues were down by -10.6% from $301.2 million in Q4 2008 to $269.3 million in Q4 2009. Operating profits in Italy were down by -54.7% from $24.3 million in Q4 2008 to $11.1 million in Q4 2009.

In other EMEA countries Q4 2009 revenues were down by -6.4% to $1.477 billion from $1.578 billion in Q4 2008 with the biggest declines (in constant currency) coming from the Nordics (-23%) and the Netherlands (-19%). Elan, Manpower's IT staffing specialist experienced a -25% decline in EMEA revenue (in constant currency). Operating profits in other EMEA countries were down by -32.2% from $37.1 million in Q4 2008 to $25.1 million Q4 2009.

On a more positive note, the Company is anticipating revenue growth in all its major geographies during Q1 2010. Jeffrey A. Joerres, Manpower Chairman and CEO, said "we continue to see solid evidence of improving trends in nearly all geographies we operate in. Each week that passes, we are more confident about the sustainability of the recovery."

Francoise Gri, President of Manpower France, told Le Journal de Finance "temporary employment in France will pick up slowly in 2010 with 5% to 6% growth."

Manpower has equally announced it plans to buy Comsys IT Partners Inc. (NASD:CITP) for $17.65 per share for a total enterprise value of $431 million. In January 2010, Comsys announced that it expected its annual 2009 revenue to be in the range of $647 million to $652 million. Manpower will pay half in cash and half in shares but has the option to pay all in cash. The deal is expected to close in April.

Comsys, a Houston-based information technology staffing firm with 52 branches, ranked as the third-largest provider of IT staffing in the US, according to Staffing Industry Analysts' list of largest IT staffing firms based on 2008 revenue. Outside of the US, Comsys also has offices in Puerto Rico, Canada and the UK.

Comsys also owns Tapfin, which provides vendor management services, recruitment process outsourcing and services procurement management. Tapfin ranked as the third-largest managed services provider based on 2008 spend in project-based services performed under a statement of work, according to the 2009 VMS and MSP Supplier Competitive Landscape report by Staffing Industry Analysts.

Manpower reported the combined MSP offering after the deal will have total flow-through dollars of $3.5 billion.

Manpower said it expects $20 million in synergies from the deal.

At the close of NYSE trading yesterday Manpower's shares were up by 3.78% to $55.17



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