See financial measures on pages 30 and 31 for further information on constant currency and organic constant currency.

Business Overview

Manpower Inc. is a world leader in the employment services industry. Our global network of approximately 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.

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 competitors 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 that 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 towards 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 are now experiencing, 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 in excess of 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 a large 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. We see 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, so they tend to soften the impact of any economic cycles 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.

Operating Results - Three Months Ended September 30, 2009 and 2008

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 7,000 or 20% of our employee base and closed 456 branches or 10% 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. In the third quarter of 2009, we made the decision not to take any further significant actions. 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.

The following table presents selected consolidated financial data for the three months ended September 30, 2009 as compared to 2008.

(in millions except per share                                                               Constant
data)                                 2009             2008           Variance          Currency Variance
Revenues from services             $  4,192.1       $  5,668.4             (26.0 )%             (21.5 )%

Cost of services                      3,485.5          4,640.8             (24.9 )              (20.2 )
Gross profit                            706.6          1,027.6             (31.2 )              (27.5 )
      Gross profit margin                16.9 %           18.1 %

Selling and administrative
expenses                                664.6            843.5             (21.2 )              (16.9 )
Goodwill and intangible asset
impairment charges                       61.0            163.1
Selling and administrative
expenses                                725.6          1,006.6             (27.9 )              (24.3 )

Operating (loss) profit                 (19.0 )           21.0               N/A                  N/A
Operating (loss) profit margin           (0.5 )%           0.4 %

Interest and other expenses              29.3             13.4             118.0
(Loss) earnings before income
taxes                                   (48.3 )            7.6               N/A                  N/A

Provision for income taxes                2.1             50.8
Effective income tax rate               (4.2) %          672.5 %
  Net loss                         $    (50.4 )     $    (43.2 )             N/A                  N/A
Net loss per share - diluted       $    (0.64 )     $    (0.55 )             N/A                  N/A
Weighted average shares -
diluted                                  78.4             78.6              (0.3 )%

The year-over-year decrease in Revenues was primarily attributable to:

o decreased demand for services in most of our markets, including the Americas, France, EMEA, Asia Pacific and Jefferson Wells, where revenues decreased 14.4%, 26.8%, 23.8%, 10.5% and 34.9%, respectively, on a constant currency basis;

o a 4.5% decrease due to the impact of currency exchange rates due to the strengthening of the U.S. Dollar relative to the currencies in most of our non-U.S. markets;

o offset by increased demand for Right Management's services where revenues increased 29.2% on a constant currency basis.

We continued to see stabilization and, in some instances, an improvement in year-over-year revenue growth rates in the third quarter. If the current unfavorable economic environment continues, we may continue to experience a significant decline in business volumes in all of our staffing segments, and an increase in business volumes in Right Management. 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 year-over-year decrease in Gross Profit Margin was primarily attributable to:

o a 132 basis point (-1.32%) decline from our temporary recruitment business due to pricing pressures in most major markets and a change in the mix of our staffing business as we are seeing our higher margin small/medium sized business decline at a faster rate than our key account business;

o a 74 basis point (-0.74%) decline due to the 59.4% constant currency decline in our permanent recruitment business;

o a 68 basis point (+0.68%) increase from our specialty business, primarily due to the growth of Right Management, where the gross profit margin is higher than the Company average, and margin expansion at Right Management resulting from the significant growth in the Career Transition business; and

o an 11 basis point (+0.11%) increase due to the impact of currency exchange rates on the mix of our business.

The 27.9% decrease in Selling and Administrative Expenses for the third quarter of 2009, or 24.3% decrease in constant currency, was attributable to:

o a $61.0 million goodwill impairment charge recorded in the third quarter of 2009 related to Jefferson Wells as compared to a $163.1 million goodwill and intangible asset impairment charge recorded in the third quarter of 2008 related to Right Management (see Note 1 to the Consolidated Financial Statements for further information); and

o our focus on reducing expenses and rebalancing our cost structure in response to the lower business volumes.

Selling and Administrative Expenses as a percent of revenue decreased 0.5% (-50 basis points) in the third quarter of 2009 compared to 2008. This change consists of:

o a 143 basis point (-1.43%) decrease due to the decrease in the goodwill impairment charge recorded in the third quarter of 2009 compared to the third quarter of 2008;

o offset by a 95 basis point (+0.95%) increase due primarily to the deleveraging of expenses given the drop in revenues, as we can only decrease expenses to a certain level without negatively impacting the long-term potential of our branch network and brands.

Interest and Other Expenses were $29.3 million for the third quarter of 2009 compared to $13.4 million for the same period in 2008. Net Interest Expense increased $9.0 million in the third quarter to $19.8 million, primarily due to the $7.5 million of interest expense related to the early extinguishment of our interest rate swap agreements and the amended revolving credit facility (see Note 1 to the Consolidated Financial Statements for further information). The remaining $1.5 million increase in Net Interest Expense is due to the decrease in interest income because of lower interest rates on our cash and investments. Translation gains were $0.6 million in the third quarter of 2009 and 2008. Miscellaneous Expenses, net, which consist of other non-operating income and expenses, provided income of $0.2 million in the third quarter of 2009 compared to expense of $3.2 million in the third quarter of 2008. In the third quarter of 2009, we also incurred a $10.3 million loss related to a sale of an equity investment in Japan.

We recorded an income tax expense at an effective rate of -4.2% for the third quarter of 2009, compared to an effective rate of 672.5% for the third quarter of 2008. The change in the rate was due to the non-deductibility of the goodwill impairment charges related to Jefferson Wells in 2009 and Right Management in 2008, as well as a change in the amount and mix of non-U.S. earnings and related cash repatriations. Excluding the impact of discrete items, our effective tax rate for the third quarter of 2009 was 34.6%. This rate is different than the U.S. Federal statutory rate of 35% and our 2008 annual effective tax rate of 36.6% due primarily to the impact of the mix of U.S. and non-U.S. earnings, valuation allowances recorded on non-U.S. net operating losses and other permanent items.
Net Loss Per Share - Diluted was a loss of $0.64 per diluted share in the third quarter of 2009 compared to a loss of $0.55 per diluted share in the third quarter of 2008. Included in Net Loss in the third quarter of 2009 were a $61.0 million, net of tax, or $0.78 per diluted share, goodwill impairment charge recorded related to Jefferson Wells, $4.6 million, net of tax, or $0.06 per diluted share, of interest expense related to the extinguishment of our interest rate swap agreements and amended revolving credit facility, and $5.3 million, net of tax, or $0.06 per diluted share related to the sale of an equity investment in Japan. Included in Net Loss in the third quarter of 2008 is the goodwill and intangible asset impairment charge related to Right management of $154.6 million, net of tax, or $1.97 per diluted share. Exchange rates had a $0.02 negative impact on Net Loss Per Share - Diluted in 2009 compared to 2008. Weighted Average Shares - Diluted were 78.4 million shares in the third quarter of 2009, a decline of 0.3% from the third quarter of 2008. This decline is primarily a result of share repurchases made in 2008. There was no dilutive impact of stock-based awards in the third quarter of 2009 and 2008 as we were in a loss position in both years.

Operating Results - Nine Months Ended September 30, 2009 and 2008

The following table presents selected consolidated financial data for the nine
months ended September 30, 2009 as compared to 2008.



(in millions except per share                                                          Constant Currency
data)                                 2009             2008          Variance              Variance
Revenues from services             $ 11,635.8       $ 16,959.9            (31.4 )%           (23.4 )%

Cost of services                      9,564.0         13,811.0            (30.8 )            (22.5 )
Gross profit                          2,071.8          3,148.9            (34.2 )            (27.0 )
      Gross profit margin                17.8 %           18.6 %

Selling and administrative
expenses                              2,002.2          2,625.5            (23.7 )            (15.5 )
Goodwill and intangible asset
impairment charges                       61.0            163.1
Selling and administrative
expenses                              2,063.2          2,788.6            (26.0 )            (18.3 )

Operating profit                          8.6            360.3            (97.6 )            (94.7 )
Operating profit margin                   0.1 %            2.1 %

Interest and other expenses              52.0             38.6            (34.7 )
(Loss) earnings before income
taxes                                   (43.4 )          321.7              N/A

Provision for income taxes              (14.6 )          182.0              N/A
Effective income tax rate                33.8 %           56.6 %
Net (loss) earnings                $    (28.8 )     $    139.7              N/A                N/A
Net (loss) earnings per share -               )
diluted                            $    (0.37       $     1.75              N/A
Weighted average shares -
diluted                                  78.3             80.0             (2.1 )%

The year-over-year decrease in Revenues was primarily attributable to:

o decreased demand for services in most of our markets, including the Americas, France, EMEA, Asia Pacific and Jefferson Wells, where revenues decreased 16.0%, 32.9%, 23.4%, 10.1% and 34.4%, respectively, on a constant currency basis;

o an 8.0% decrease due to the impact of currency exchange rates due to the strengthening of the U.S. Dollar relative to the currencies in most of our non-U.S. markets, on average over the year;

o offset by increased demand for Right Management's services where revenues increased 39.8% on a constant currency basis.

The year-over-year decrease in Gross Profit Margin was primarily attributable to:

o a 73 basis point (-0.73%) decline from our temporary recruitment business mainly due to pricing pressures in most of our markets because of 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, such as Sweden, Germany, the Netherlands and Italy reported larger declines in business than countries with relatively lower gross profit margins;

o a 65 basis point (-0.65%) decline due to the 57.8% constant currency decline in our permanent recruitment business;

o a 32 basis point (-0.32%) decline due to the favorable impact in 2008 from the modification to the calculation of payroll taxes in France;

o offset by an 82 basis point (+0.82%) increase from our specialty business, primarily due to the growth of Right Management, where the gross profit margin is higher than the Company average, and margin expansion at Right Management resulting from the significant growth in the Career Transition business; and

o a 12 basis point (+0.12%) increase due to the impact of currency exchange rates on the mix of our business.

The 26.0% decrease in Selling and Administrative Expenses for the nine months ended September 30, 2009, or 18.3% decrease in constant currency, was attributable to:

o our focus on reducing expenses and rebalancing our cost structure in response to the lower business volumes;

o a $61.0 million goodwill impairment charge recorded in the third quarter of 2009 related to Jefferson Wells compared to a $163.1 million goodwill and intangible asset impairment charge recorded in the third quarter of 2008 related to Right Management (see Note 1 to the Consolidated Financial Statements for further information);

o a decline of $54.1 million of costs for a legal reserve related to the French competition investigation recorded in the second quarter of 2008 (see Note 13 to the Consolidated Financial Statements for further information);

o a $4.3 million gain in Japan related to the termination of a defined benefit plan, a $3.9 million reversal related to the French competition investigation and a $4.9 million reversal of an acquisition earn-out provision that we determined was no longer necessary, all of which were recorded in the first quarter of 2009; and

o offset by $20.8 million of reorganization charges for severances and other office closure costs recorded in the first nine months of 2009.

Selling and Administrative Expenses as a percent of revenue increased 1.3% (+130 basis points) in the nine months ended September 30, 2009 compared to 2008. This change consists of:

o a 202 basis point (+2.02%) increase due primarily to the deleveraging of expenses given the decline in revenues, as we can only decrease expenses to a certain level without negatively impacting the long-term potential of our branch network and brands;

o a 17 basis point (+0.17%) increase due to the global reorganization charges recorded in the first six months of 2009;

o offset by a 46 basis point (-0.46%) decrease due to the legal reserve recorded related to the French competition investigation recorded in 2008; and

o a 44 basis point (-0.44%) decrease due to the decrease in the goodwill impairment charge recorded in the third quarter of 2009 compared to third quarter of 2008.

Interest and Other Expenses were $52.0 million for the first nine months of 2009 compared to $38.6 million for the same period in 2008. Net Interest Expense increased $6.8 million in the first nine months of 2009 to $39.2 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. Excluding the impact of the interest rate swap, Net Interest Expense decreased $0.7 million in the first nine months of 2009 due to our Euro-denominated interest expense being translated into U.S. Dollars at a lower rate in 2009 compared to 2008. Translation losses in the first nine months of 2009 were $0.9 million compared to gains of $2.1 million in the first nine months of 2008. Miscellaneous Expenses, net, which consist of other non-operating income and expenses, were $1.6 million in the first nine months of 2009 compared to $8.3 million in the first nine months of 2008. In the first nine months of 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 at an effective rate of 33.8%, for the nine months ended September 30, 2009, compared to an income tax expense at an effective rate of 56.6%, for the nine months ended September 30, 2008. The change in the rate was due to the non-deductibility of the goodwill impairment charges related to Jefferson Wells in 2009 and Right Management in 2008, as well as a change in the amount and mix of non-U.S. earnings and related cash repatriations. Excluding the impact of discrete items, our effective tax rate for the first nine months of 2009 was 38.3%. This rate is different than the U.S. Federal statutory rate of 35% and our 2008 annual effective tax rate of 36.6% due primarily to the impact of the mix of U.S. and non-U.S. earnings, valuation allowances recorded on non-U.S. net operating losses and other permanent items.

Net (Loss) Earnings Per Share - Diluted was a loss of $0.37 per diluted share in the first nine months of 2009 compared to earnings of $1.75 per diluted share in the first nine months of 2008. Included in Net Loss in the first nine months of 2009 were a $61.0 million, net of tax, or $0.78 per diluted share, goodwill impairment charge recorded in the third quarter of 2009 related to Jefferson Wells, $13.6 million, net of tax, or $0.18 per diluted share, of reorganization charges recorded in the first nine months of 2009, $4.6 million net of tax, or $0.06 per diluted share, related to interest expense for the extinguishment of our interest rate swap agreements and amended revolving credit facility, and $5.3 million, net of tax, or $0.06 per diluted share, related to the sale of an equity investment in Japan. Included in Net Earnings in the first nine months of 2008 were $154.6 million, net of tax, or $1.93 per diluted share, goodwill and intangible asset impairment charge related to Right Management, $35.2 million, net of tax, or $0.44 per diluted share, of the benefit from the modification to the payroll tax calculation in France, and $50.0 million, net of tax, or $0.63 per diluted share, of the increase to the legal reserve related to the French competition investigation. Exchange rates had a $0.05 negative impact on Net Earnings Per Share - Diluted. Weighted Average Shares - Diluted were 78.3 million shares in the first nine months of 2009, a decline of 2.1% from the first nine months of 2008. This decline is primarily a result of share repurchases in 2008 and no dilutive impact of stock-based awards in 2009 as we were in a loss position for the first nine months.

Segment Operating 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

In the Americas, Revenues decreased 19.6% (-14.4% in constant currency) in the third quarter of 2009 compared to 2008. In the United States (which represents 63.0% of the America's revenues), Revenues declined 21.2%, or 24.0% excluding acquisitions. Revenues in Other Americas declined 16.9%, or 2.3% in constant currency, with Mexico and Central America reporting revenue increases of 5.7% and 17.6% in constant currency, respectively and Argentina reporting revenue declines of 13.6% 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 59.0% in the Americas and 64.7% in the United States. These declines show stabilization and some improvement in the market from the declines experienced in the first and second quarter of 2009, where revenues for the Americas decreased 14.9% and 18.6% in constant currency, respectively. The United States market also saw stabilization and year-over-year improvement in business volumes during the third quarter of 2009 and into the first few weeks of October primarily in the light industrial area, with some signs of improvement in the professional business.

Gross Profit Margin decreased during the third quarter and first nine months of 2009 compared to the third quarter and first nine months of 2008 due to a decrease in temporary staffing margins, which was caused primarily by the pricing pressures on our staffing business, and the decline in our permanent recruitment business. Acquisitions had a slightly positive impact on Gross Profit Margin during the first nine months of 2009.

Selling and Administrative Expenses decreased during the third quarter and first . . .