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PEOPLE. SOLUTIONS VALUE.
Manpower Inc. 1999 Annual Report
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Financial Highlights
[BAR GRAPHS]
(a) Represents total sales of Company-owned branches and franchises.
(b) For 1999, Operating Margin does not include the $28.0 of nonrecurring items,
related to employee severances, retirement costs and other associated
realignment costs. For 1998, Operating Margin does not include the $92.1 million
write-down of capitalized software.
TABLE OF CONTENTS
page
Letter to Shareholders 2
People. 6
Solutions. 12
Value. 16
Management Discussion and Analysis of 20
Financial Condition and Results of Operations
Report of Independent Public Accountants 28
Consolidated Financial Statements 29
Notes to Consolidated Financial Statements 34
Corporate Information 47
Principal Operating Units 48
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COMPANY PROFILE
People are what we're about. Solutions set us apart. And that combination is how
we deliver value-to our customers, our employees and our shareholders.
Manpower is a world leader in staffing and workforce management solutions,
serving more than 400,000 customers around the globe and distinguished by a
series of significant strengths. We are the leading global staffing brand, a
name that stands for quality, service and innovation to employers and employees
worldwide. We have geographic diversification, meeting customer needs through a
network spanning almost 3,400 offices in 52 countries. We have a vast and
growing employee base, currently comprised of 2.1 million skilled people. We
offer a diversified service mix, including office, industrial, professional and
call center resources and expertise. And we provide a broad range of proprietary
assessment, selection and training programs that give us the industry's
highest-quality service delivery system.
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TO OUR SHAREHOLDERS
The year 1999 was one of significant and meaningful progress at Manpower.
Throughout the year, our mission was simple: to execute our plan with urgency
and improve profitability. Here's our scorecard.
Systemwide sales increased to $11.5 billion, with all of the nearly $1
billion increase coming from organic growth. This growth has strengthened our
position as the most recognized global brand in the industry, and was achieved
with a watchful eye on profitability. Operating margin reached a record $258.7
million, up 16 percent from 1998.
In sum, we set and achieved several aggressive goals. As we enter 2000,
we are advancing in all geographies with a clear purpose and intense energy,
supported by the strength, depth and continuity of our office network that
allows us to set the bar high and have the confidence to achieve. Our vision of
being the pre-eminent global provider of higher-value workforce management
services and solutions is unlocking additional value for our shareholders and
further securing our place as the thought leader in the staffing industry.
[PHOTO]
Jeffrey A. Joerres
President & Chief Executive Officer
Achieving our financial goals begins with our brand, the leading "name"
in the industry. In a world that is moving at web speed and creating new
companies through mergers, acquisitions and quick start ups, it is my firm
belief that great brands will win. Winning, of course, is based on opportunity
and execution. And both of those exist for us.
The tightness of the labor market in virtually all of the 52 countries
in which we operate is imposing a considerable challenge on the business world.
The combination of a strong global economy, mounting competition and advancing
technology have created both a critical shortage of skilled workers and the need
for businesses to operate efficiently, productively and as flexibly as possible.
These global developments are driving a growing demand for the staffing services
that Manpower provides.
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Our vision of being the pre-eminent global provider of higher-value
workforce management services and solutions is unlocking additional value
for our shareholders and further securing our place as the thought leader
in the staffing industry.
But structural changes are taking place in our industry as well. Our
customers, and businesses in general, are asking for a staffing firm to supply
more than just people for seasonal or short-term assignments. They need staffing
partners to identify and implement effective workforce solutions directed at
their strategic objectives. This is the value Manpower can deliver today to more
than 400,000 customers worldwide and it is the market position we intend to own
going forward.
It is this need for flexible staffing solutions that will drive our
revenue growth - a key element in our future success. This growth, however,
must be in the right geographies, the right industries and with companies where
the opportunities are greatest to deliver higher-value services and solutions.
This focus was exemplified in 1999 by the expansion of our office
network. We opened more than 200 offices in high-potential markets, and our
investments are paying off handsomely. Germany, Italy and Spain are just a few
examples of our aggressive office openings. In Germany, we grew revenues
organically at an impressive 28 percent rate - well above the growth rate for
the German market overall - and brought even greater gains to the bottom line.
And nowhere in our network is there a better example of margin improvement than
in France. Here, we achieved substantial improvements in gross margin while
maintaining our market position.
Technology is also a major focus for us. The Internet opens up vast
opportunities to advance our offerings and further add to the Manpower brand. We
have already put in place several e-commerce applications - from the Global
Learning Center, which delivers e-training and development to our employees, to
UltraSource", a leading-edge web-based order management system for our
customers. These two applications are only a few examples of what we already
have, and only the beginning of the e-commerce solutions we will offer our
customers, as we are committed to "e-thinking" every aspect of our business.
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Improving our efficiency is a key element to enhancing shareholder
value. There is tremendous leverage opportunity in Manpower, with even a modest
increase in productivity translating into gains in value for our customers and
shareholders. And we are looking for much more than modest productivity
improvements. We are looking at every element of our business, from the service
desk to the corporate headquarters, to improve our processes and streamline
service delivery. Efficiency, however, does not mean simply cutting costs or
constraining investment. In the year 2000, we expect to increase our capital
expenditures to invest in the right opportunities for Manpower's long-term
growth.
We are also advancing more aggressively in the professional and
specialty staffing business. Our target: to make professional and specialty
services account for a third of our revenue over the next five years. To that
end, we re-branded Manpower(R) Technical, our former U.S. specialty business, as
Manpower(R) Professional and reorganized this group to capitalize on our unique
offerings and exceed the expectations of our customers. Today, Manpower
Professional is our fastest growing business unit in the U.S., achieving 12
percent sales growth in 1999.
We have also looked to strengthen our position in the specialty
staffing area in Europe with the strategic acquisition of Elan Group Ltd. in the
United Kingdom. Beyond positioning the combined company as the United Kingdom's
IT staffing leader, the acquisition creates a firm foothold for expansion
throughout continental Europe under the Elan brand.
Acquisitions are an element of our plan, but we are not interested in
buying revenues, earnings and the integration issues that size-driven
acquisitions can entail. Our goal is straightforward: to identify and pursue
opportunities that have the potential to energize and enrich our current
business. Our organic growth model will remain our focus, but we are open to
strategic acquisitions that will add value for our customers and our
shareholders.
In a world that is moving at web speed and creating new companies
through mergers, acquisitions and quick start ups, it is my firm belief that
great brands will win. Winning, of course, is based on opportunity and
execution. And both of those exist for us.
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Great things happen when - and only when - an organization's interests
are aligned with those of its customers and its shareholders, and at Manpower
our objectives are aligned. Today, across our company, a common understanding is
shared of what Manpower is trying to do and how each individual can contribute
to our success.
Great things happen when - and only when - an organization's interests
are aligned with those of its customers and its shareholders, and at Manpower
our objectives are aligned. Today, across our company, a common understanding is
shared of what Manpower is trying to do and how each individual can contribute
to our success. We are working together to build revenue, to improve efficiency
and productivity, and to take quality to ever-higher levels.
The fact that we are so well positioned is due in no small measure to
the contributions of all the dedicated Manpower people worldwide who made 1999 a
successful year for our company by demonstrating what happens when we plan our
work and execute our plan together. We had a good year in 1999. We will all be
working hard to ensure that 2000 is even better. I also want to acknowledge John
R. Walter who, after serving on our Board for a year, took on the additional
responsibility of serving as non-executive Chairman in May. John's business
knowledge, gained as Chairman, President and CEO of R.R. Donnelley & Sons
Company and, more recently, as President of AT&T is already helping Manpower
move forward.
* * * * *
Special recognition is in order for Mitchell S. Fromstein who, after 23
years as Chairman, President and CEO, retired in May 1999. Mitchell's commitment
to improving Manpower every day is a model for the entire company and industry.
I would also like to express my personal gratitude to Mitchell for supporting
and assisting me into my role as CEO.
Respectfully,
Jeffrey A. Joerres
President & Chief Executive Officer
March 1, 2000
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People are what we're about
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Discovering strengths. Developing skills. Building careers. In today's
competitive marketplace, companies worldwide are turning to Manpower for
insight, innovation, and creativity to meet their recruiting, retention and
workforce management requirements. We have our industry's most advanced skill
evaluation and development tools to match employee experience, talents and
interests to business needs.
But more importantly, we are committed to building long-term relationships with
our employees through continuous training and skill development, which helps
them expand their capabilities, discover new strengths and build rewarding
careers.
In 1999, we took our leadership to new levels in building strong employee
relationships and expanding the pool of skilled workers we can provide to
customers.
We streamlined our proprietary Predictable Performance System, which provides
in-depth assessment of employees' experience, skills, attitudes and interests,
as well as an analysis of customer work environments and job requirements. The
result: we've made sourcing and assigning qualified people even more efficient.
We also employed advanced technology to strengthen our ability to recruit, train
and develop employees. For example, we established relationships with major
Internet job banks, allowing us to capitalize on this resource to better serve
our customers' needs and the candidates' ambitions. At the same time, we
continued to deploy our prototype virtual recruiting capabilities, enabling us
to contact, interview, screen and assign new employees with unparalleled
efficiency. We continued to fortify our Global Learning Center (GLC), our
Internet-based "virtual campus" which offers about 1,000 educational courses
online, to help employees stay on the cutting edge of their careers through
e-learning. At last count, the GLC had more than 10,000 English-language users
in the U.S., the U.K., Sweden, Norway, France, Australia, New Zealand,
Singapore, Hong Kong, Japan, Korea, Malaysia, Thailand and Taiwan. And we will
be introducing additional language versions in 2000. We also helped customers
worldwide meet the mounting demand for skilled workers through our retraining
and career re-engineering capabilities. Mergers, acquisitions, and other
business events mean that companies increasingly must retrain or outplace
talented, committed people. At Manpower, we're helping employees turn these
challenges into opportunities by expanding their skills and finding paths to
promising new careers in an ever-changing economy.
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ERICSSON/SWEDEN
"Through our partnership with Manpower, we are helping our
employees, not only to find new jobs, but also to develop their
careers in new ways. This is the best possible solution to ensure
that, in a situation where we have to reduce staff, our employees
will make a successful transition to new employment. Our
relationship with Manpower has made this process much easier."
-Ann-Charlotte Dahlstrom/Vice President, Human Resources, Network
Operators & Service Providers
Career re-engineering. Ericsson, like many companies around the world, has
faced one of the most difficult challenges employers ever confront: the
need to significantly reduce staff due to global competition and changes in
business strategies. The question the company faced in Sweden: how to help
several hundred people find productive, satisfying new employment? For a
solution, Ericsson turned to Manpower. Working in close partnership with
Ericsson, we developed a program called FromtidsForum that went far beyond
traditional "outplacement" services, to provide these employees with a
window to the changing job market and the help they needed to transition
into rewarding new careers. The foundation of the program lies in our
industry-leading employee skill assessment and testing capabilities -- a
set of proven tools that are helping every affected employee assess their
knowledge base, work experience, interests and resources and begin to plan
a personal career path forward. But we didn't stop there. We are helping
people hone and reinforce their skills, through a combination of seminars
and specialized training, delivered in conjunction with Ericsson. We are
delivering active job-search assistance by leveraging our contacts and
coordinating with government job agencies. And we have provided temporary
placements through Manpower to interested employees, which helps them gain
added exposure to the job market, and expand their skills and contact
networks. The result? The people affected are well on their way to new
careers. And Ericsson has strengthened its reputation as an employer that
cares and is willing to invest in the future of its employees.
Mergers, acquisitions and other business events mean that companies increasingly
must retrain or outplace talented, committed people. At Manpower, we are helping
employees turn these challenges into opportunities by expanding their skills and
finding paths to promising new careers in an ever changing economy.
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[PHOTO]
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[PHOTO]
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UNISYS/FRANCE
"Unisys has relied upon Manpower to provide IT workers, technicians and office
administration staff in many countries around the world. We continue to expand
our relationship with Manpower because they are able to deliver creative
solutions that ensure we have the people we need to get the job done, despite
the critical labor and skill shortages that currently exist worldwide." -- Terry
Laudal / Vice President, Resource Planning and Recruiting
Creating a skilled labor pool. In today's electronic world, business is being
redefined every day, and often the impact is felt most keenly by technology
companies themselves. This was the case with Unisys, one of the world's leading
computer information and technology firms. As demand for the company's services
in France mounted, Unisys needed to recruit rising numbers of entry-level
high-tech employees -- more people, in fact, than it could access on its own. To
address this challenge, Unisys called on Manpower. Our solution: we concentrated
on attracting recent college graduates with degrees in the sciences, such as
physics, chemistry, biology, and math. These graduates have the same basic
skills and profiles as graduates with IT degrees, but in France they often have
difficulty finding jobs in their fields. Working with Unisys, we developed a
comprehensive solution to recruit, screen, evaluate and select high-potential
science graduates at the beginning of their careers, coordinate training
tailored to the company's requirements, and manage their integration into Unisys
assignments. One key: in addition to working with the candidates themselves, we
also help Unisys managers to successfully transition the new employees into line
assignments. The result of this innovative program: Unisys gains the talented IT
employees it needs, and new science graduates who faced an uncertain future
obtain the skills and experience they need to build promising careers in a
changing world.
Employers want access to qualified workers -- employees with the education,
experience, interests, and portfolio of skills needed to get the job done right.
Employees want opportunities to advance their careers. At Manpower, we bring
business and employee interests together, with innovative thinking, advanced
recruiting, skill-identification, and performance tracking systems, and the best
continuing training and development programs in the business.
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Solutions set us apart.
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Informed thinking. Innovative services. Proven results. The business world is
changing, and so is the world of work. Where companies once thought of temporary
staffing in terms of finding fill-in workers, today they view it as a
mission-critical means of managing their workforces on a flexible, just-in-time
basis. Businesses are looking for intelligent, innovative approaches to urgent
issues, and they count on Manpower to provide them. Our range of services
matters, of course. But what sets us apart is the way we think. Rather than
selling a set of "off-the-shelf" services, we deliver the ideas and perspectives
that employers need to develop effective workforce management solutions. Demand
is growing worldwide for workforce solutions to meet the need for high-end
professional staff, and Manpower is focused on meeting that demand. In 1999, we
made a major commitment to dedicate more resources to the full range of IT,
telecommunications, engineering, scientific, financial and other professional
staffing services we provide worldwide. Beyond access to flexible staffing on a
project basis, Manpower's professional and specialty staffing brands provide
customers with state-of-the-art recruiting and retention capabilities, and a
full range of continuous training services to ensure our talented pool of
professional contractors are capable of handling the most challenging
assignment. We give employees access to online training, technical certification
and on-the-job experience with the world's leading companies. The result:
professional and specialty staffing services are one of our fastest-growing
business segments. Call centers represent another important Manpower focus, as
the demand for these services grows exponentially worldwide. With the rapid rise
of e-commerce, call centers and customer care centers play a vital role in the
customer relationship-management equation. Many of the world's leading companies
rely on Manpower for the large-scale recruiting, selection and training needed
to deliver customer service excellence. Today, more than 50,000 Manpower
employees staff call centers and customer care centers around the globe. We
also took strategic out sourcing to new levels, from on-site human resource
management to total outsourcing of customer functions and operations. Some of
these challenging initiatives involved taking our major-project planning,
staffing and management capabilities in important new directions, such as
supporting brand introductions and new-product rollouts in South America.
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ELIZABETH ARDEN/U.S.
"This is a value-added relationship for us. Manpower isn't just supplying
us with a variable workforce, but has been able to absorb ownership of the
entire assembly portion of our process. I think this differentiates them
from others in their business. They are the perfect partner for us." -- Roy
C. Drilon / Vice President, Operations
The power of partnership. Every year, Elizabeth Arden's operations in Roanoke,
Virginia assemble more than 15 million promotional gift sets. While assembly was
an important aspect of the cosmetic maker's operations, it also was a highly
seasonal activity that tended to disrupt the manufacturing process because of
the peaks and valleys in the assembly workload. To make the assembly process
more efficient, the company considered outsourcing these operations to an
out-of-state packaging firm, an action that would have added significant
shipping charges, moved hundreds of jobs out of Roanoke, and made it harder to
handle rushed or special orders. That's where Manpower's comprehensive and
creative workforce-management solutions came in. In a step beyond our role in
supplying temporary assembly staff for the company, we worked collaboratively
with Elizabeth Arden to help redefine its processes through strategic assembly
outsourcing. It took thought, planning, and a willingness to work as a long-term
partner. And it paid off in results. We now manage Elizabeth Arden's entire
assembly operation, providing everything from the assembly workforce,
supervisory and management team, to the facility in which they work. The
efficiency we provide translates into significant annual savings and a superior
customer service level for Elizabeth Arden. Just as important, by keeping the
assembly operation in Roanoke, the company can closely monitor process quality.
And it prevented the loss of local jobs that would have occurred if this work
had been sent out of state.
For employers worldwide, managing workforces at single sites or across countries
and continents is an increasingly complex challenge, and one that is central to
success. In addressing these issues, Manpower is delivering the resources,
perspectives, and innovative solutions employers need to meet the challenges and
capitalize on the opportunities of today's marketplace.
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[PHOTO]
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VALUE IS OUR STANDARD
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Advanced technology. Forward thinking. Aligned interests. As globalization
redefines the scope of business and the Internet reshapes business practices
from the ground up, companies are rethinking the value of everything they do.
The challenges presented by the worldwide shortage of skilled labor have made
human resources a top business priority. At Manpower, we're helping employers
navigate these changes by partnering with them in new, innovative ways to
deliver the flexible workforce solutions that are essential to creating real
value. In 1999, we helped customers worldwide re-evaluate their workforce
management strategies and find new ways to serve their customers and gain a
competitive edge. By integrating our services with the customer's business
requirements, we delivered the solutions they needed to manage business
transitions and staffing fluctuations in ways that made massive organizational
change a seamless process for their customers. We also provided large-scale
global solutions to some of the world's most prominent companies, ranging from
on-site management to outsourcing that ensured a predictable, quality workforce
was getting the job done right. The importance of technology in delivering these
value-added solutions begins in our own operations, with the ability to share
ideas and best practices, support global and regional customers, improve
productivity, increase efficiency and drive continuing growth. In 1999, we
upgraded our information technology capabilities by implementing powerful new
systems to meet changing operating demands. These efforts were enhanced by the
introduction of technology-driven solutions that help employers better manage
their workforces, whether they depend on Manpower alone or deal with multiple
suppliers. UltraSource, our leading-edge web-based order management system, is a
prime example. With UltraSource, customers get a complete vendor management
solution incorporating not just technology but also effective Manpower-led
workflow processes. Staff requisition, order status review, order deployment to
multiple suppliers, resume review and interview scheduling are all handled
online. Customers can track every stage of the process electronically, with
automated e-mail notification to proactively keep all parties informed. Just as
important, UltraSource captures relevant metrics to allow Manpower and its
customers to monitor process performance and drive continuous improvement.
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[PHOTO]
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MILLENNIUM DOME/U.K.
"The breadth and depth of Manpower's service has enabled us to develop and
deliver a truly world-class HR programme. Not only do we have the best-quality
people, but the best support systems and the knowledge that Manpower will help
our people continue their careers at the end of the Year 2000." -- Raj
Pragasam/Director, Human Resources, New Millennium Experience Company
Innovation for the New Millennium. At this pivotal point in history, a
revolution is underway in the worldwide workplace, and Manpower is offering a
glimpse into the future of work with our sponsorship of the Work Zone at the
Millennium Dome in Greenwich, England. The Work Zone is one of 14 discovery
zones housed in the 2.5 million square-foot complex and it is expected to host
12 million visitors this year, to explore the possibilities that the future
holds. But we're doing more than just thinking about the future of work. We're
putting our ideas into action as the company selected to handle human resources
management for the New Millennium Experience Company (NMEC), the company that
created the Millennium Dome itself.
Our job went far beyond recruiting and placing the 2,000-plus hosts and
assistant visitor service managers the Dome requires. Despite its scale, the
Millennium Dome is a start-up enterprise, and we called on our full range of
capabilities -- from strategic project planning to training, administration and
on-site management -- to give NMEC a world-class HR program. Systems support
also was essential. Although the Dome's staff is employed directly by NMEC, we
help the company manage payroll and staffing levels simultaneously through a
customized IT solution that not only captures attendance and wage data, but also
helps monitor staffing levels across the Dome, to ensure they are attuned to
visitor demand. And our global resources, local staffing connections, and skill
development tools are critical as well. Not only do we give NMEC the best people
and the best support systems; we also give them the knowledge that we can help
their employees continue their careers after the year 2000.
For Manpower, success means delivering real value to our customers, our
employees, and our shareholders. We create value for our customers by helping
them achieve their business objectives. For employees, we make work more
meaningful and more rewarding. For investors, we improve productivity and
efficiency, and generate profitable growth. And, in everything we do, the speed,
flexibility, and new ideas driven by advanced technology are the keys to value
creation.
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Management's Discussion and Analysis
of Financial Condition and Results of Operations
Nature of Operations Manpower Inc. (the "Company") is a leading non-governmental
employment services organization, providing staffing and workforce management
services and solutions to a wide variety of customers. Through a global network
of almost 3,400 systemwide offices in 52 countries, the Company provides
temporary staffing services, contract services and training and testing of
temporary and permanent workers.
Systemwide information referred to throughout this discussion includes both
Company-owned branches and franchises. The Company generates revenues from sales
of services by its own branch operations and from fees earned on sales of
services by its franchise operations. (See Note 1 to the Consolidated Financial
Statements for further information.)
[PIE CHART]
Results of Operations--Years Ended December 31, 1999, 1998 and 1997 Consolidated
Results--1999 compared to 1998 The Company achieved a record Systemwide Sales
level of $11.5 billion during 1999, increasing 9.4% over the 1998 level of $10.5
billion and more than doubling the sales level of just five years ago.
Revenues from services increased 10.8%. Revenues were unfavorably impacted
during the year by changes in currency exchange rates, as the U.S. Dollar
strengthened relative to the currencies in most of the Company's non-U.S.
markets. At constant exchange rates, the increase in revenues would have been
13.2%. Volume, as measured by billable hours of branch operations, increased
10.2%.
Operating profit increased 76.9% during 1999. Excluding the impact of the
$28.0 million of nonrecurring items recorded in 1999, related to employee
severances, retirement costs and other associated realignment costs, and the
$92.1 million write-down of capitalized software in 1998, operating profit
increased 16.3%. As a percentage of revenues, operating profit increased to 2.6%
in 1999 from 2.5% in 1998.
Gross profit increased 13.4% during 1999, reflecting both the increase in
revenues and an improvement in the gross profit margin. The gross profit margin
improved to 17.5% in 1999 from 17.1% in 1998 due primarily to the enhanced
pricing of our business in France.
Selling and administrative expenses increased 15.1% during 1999. Excluding
the impact of the nonrecurring items recorded in 1999, selling and
administrative expenses increased 12.9%. As a percent of revenue, these expenses
were 14.8% in 1999 and 14.5% in 1998. This increase is due primarily to an
increase in France's business tax (taxe professionnelle) and to the continued
investment in new or expanding markets. On a worldwide basis, the Company opened
more than 200 new offices during 1999, with the majority being opened in
mainland Europe.
Interest and other expense increased $8.2 million during 1999 primarily due
to the higher borrowing levels required to finance the Company's share
repurchase program and the ongoing investments in our global office network.
The Company provided for income taxes at a rate of 27.1% in 1999 compared
to 33.5% in 1998. The decrease in the rate primarily reflects the nonrecurring
items, including a one-time tax benefit of $15.7 million related to the
Company's dissolution of a non-operating subsidiary, incurred in the second
quarter of 1999. Without these nonrecurring items, the tax rate would have been
35.5%, which is different than the U.S. Federal statutory rate due to foreign
repatriations, foreign tax rate differences and net operating loss carryforwards
which had been fully reserved for in prior years.
Net earnings per share, on a fully diluted basis, was $1.91 in 1999
compared to $.93 in 1998. Excluding the nonrecurring items recorded in 1999 and
the write-down of capitalized software in 1998, diluted earnings per share was
$1.92 in 1999 compared to $1.64 in 1998. The 1999 earnings were negatively
impacted $.05 per share due to the lower currency exchange rates during the
year. The weighted average shares outstanding decreased 3.0% due to the
Company's treasury stock purchases. On an undiluted basis, net earnings per
share was $1.94 in 1999 ($1.95 excluding the nonrecurring items) and $.94 in
1998 ($1.66 excluding the write-down of capitalized software).
Consolidated Results--1998 compared to 1997 Systemwide sales increased 18.2%
during 1998. Revenues from services increased 21.4%. Revenues were unfavorably
impacted by changes in currency exchange rates during 1998 as the U.S. Dollar
strengthened relative to the currencies in most of the
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Company's non-U.S. markets. At constant exchange rates, the increase in revenues
would have been 23.0%. Volume, as measured by billable hours of branch
operations, increased 16.5%.
Operating profit declined 48.9% during 1998 due primarily to the write-down
of capitalized software. Excluding this write-down, operating profit declined
12.9% from the 1997 level. The operating profit margin was 2.5% of revenues in
1998 compared to 3.5% of revenues in 1997. This decline in operating margins is
primarily attributable to a 1% decline in the gross profit margin, precipitated
by a change in the French payroll tax legislation. In certain of the Company's
European markets, government employment incentive programs are in place to
encourage employment by providing a credit against payroll taxes otherwise
payable. In France, legislation was enacted in late 1997 that reduced the amount
of such payroll tax credits beginning in January 1998. This reduction resulted
in higher payroll taxes and thus a higher cost of service.
Selling and administrative expenses were 14.5% of revenues in 1998 and
1997. The Company was able to maintain overhead costs at a constant percentage
of revenue in 1998 despite a significant investment in new markets and
infrastructure enhancements.
In December 1998, the Company recorded a $92.1 million ($57.1 million
after-tax) non-cash charge to write off the carrying value of software costs and
certain hardware and network infrastructure costs related to the development of
a complex and proprietary information system for its North American branch
office administration, invoicing and payroll processing.
Interest and other expense includes net interest expense of $10.8 million
and $3.1 million in 1998 and 1997, respectively. Net interest expense was
primarily impacted by changes in worldwide borrowing levels needed to finance
the Company's share repurchase program and the investments in our global office
network.
The Company provided for income taxes at a rate of 33.5% in 1998 compared
to 34.2% in 1997. The decrease in the rate relates primarily to the increased
utilization of net operating loss carryforwards. In 1998 and 1997, the Company's
effective income tax rate is lower than the U.S. Federal statutory rate due to
the utilization of capital and net operating loss carryforwards that had been
fully reserved for in prior years.
Net earnings per share, on a diluted basis, was $.93 in 1998 ($1.64 per
share excluding the write-down of capitalized software) and $1.97 in 1997. The
1998 earnings were negatively impacted $.07 per share due to lower currency
exchange rates during the year. The weighted average shares outstanding
decreased 2.6% in 1998 compared to 1997 due to the Company's treasury stock
purchases and a smaller effect of dilutive stock options caused by the lower
average share price during 1998. (See Note 2 to the Consolidated Financial
Statements for further information.) On an undiluted basis, net earnings per
share was $.94 in 1998 ($1.66 excluding the write-down of capitalized software)
and $2.01 in 1997.
Segment Results The Company is organized and managed on a geographical basis.
Each country has its own distinct operations, is managed locally by its own
management team and maintains its own financial reports. Each country reports
directly, or indirectly through a regional manager, to a member of senior
management. Given this reporting structure, all of the Company's operations have
been segregated into the following segments--the United States, France, the
United Kingdom, Other Europe and Other Countries. (See Note 13 to the
Consolidated Financial Statements for further information.)
[PIE CHART]
United States--The Company's United States operation again achieved record
systemwide sales and revenue levels during 1999, with sales of $3.8 billion and
revenues of $2.3 billion, increases of 5% over 1998.
Revenues of the light industrial sector accelerated during 1999, reaching a
15% year-over-year growth rate in the fourth quarter, as the U.S. manufacturing
economy strengthened. The growth of Manpower Professional was strong throughout
1999 posting year-over-year revenue gains of 12%.
Operating profits were up 3% for the year, but accelerated to 8% growth in
the second half of the year. The U.S. operations were able to improve their
operating margin percent in the second half of 1999, to 3.9% compared to 3.8% in
1998, as a result of improved overhead efficiencies.
21
24
Management's Discussion and Analysis (continued)
of Financial Condition and Results of Operations
[BAR GRAPH]
France--Revenues in France grew 9% in local currency to FFR23.3 billion ($3.8
billion) for 1999, reflecting a doubling of business since 1996.
Revenue growth accelerated in the second half of 1999, reaching
year-over-year gains of 16% in the fourth quarter. These gains were fueled by an
improving French economy and strong industrial production.
More importantly, we were able to achieve these revenue gains and maintain
our market position while realizing a significant improvement in operating
profit margins. Operating profits increased 39% in local currency to FFR629.3
million during 1999, on an operating profit margin improvement to 2.7% in 1999
from 2.1% in 1998. This improvement was the result of enhanced pricing
initiatives designed to recover our payroll tax cost increases. These cost
increases were the direct result of a reduction in payroll tax subsidies offered
by the French government under their employment incentive programs, which became
effective January 1, 1998.
[BAR GRAPH]
United Kingdom--Revenues in the U.K. grew 10% in local currency, reaching $1.2
billion in 1999. Operating profit margins declined during the year, reflecting
continued intense price competition on the large account business. The U.K.
operation expects to continue shifting its revenue mix to achieve a greater
balance between retail and large account business. Gross profit margins improved
each quarter throughout 1999 and year-over-year gains were realized in the
fourth quarter.
In January 2000, the Company acquired Elan Group Limited, a European
specialty IT staffing company with significant operations in the U.K. (See Note
11 to the Consolidated Financial Statements for further information.) We believe
that this acquisition strengthens the Company's position as a leading staffing
provider in the U.K. market and that it will provide a platform for rapid
expansion of the IT business in Europe.
[BAR GRAPH]
Other Europe--Revenues in the Other Europe segment grew an impressive 38% in
constant currency during 1999, exceeding the $1.5 billion mark. 1999 represents
the third consecutive year of constant currency revenue growth in excess of 30%.
This revenue growth is almost entirely organic and has been fueled by the
Company's significant investment in new office openings in Europe's rapidly
expanding markets, including Germany, Italy, Spain and Sweden.
During 1999, the Company opened more than 100 offices in the Other European
markets and has opened more than 450 offices since 1996. Operating profits also
increased 29% during 1999 to $63.2 million, as our investments in these new
offices began producing positive results.
22
25
[BAR GRAPH]
Other Countries--Revenues in the Other Countries segment exceeded the $1.0
billion mark, increasing 35% during 1999, or 24% in constant currency. This
revenue increase was driven primarily by Australia, Canada, Japan and Mexico.
The Company's largest operation within this segment is Japan, where
revenues were up 6% in local currency during 1999 despite the recession. Revenue
growth improved modestly throughout the year, accelerating to 9% in the fourth
quarter of 1999.
The operating profit margin declined during the year primarily as a result
of gross margin declines related to the recessionary environment in Japan.
[BAR GRAPH]
Liquidity and Capital Resources Cash sources Cash used by operating activities
was $.5 million during 1999. Cash provided by operating activities was $265.2
million and $25.3 million in 1998 and 1997, respectively. Included in 1999 and
1998 is $25.0 million and $175.0 million of cash received from the sale of
accounts receivable in the U.S. (See "Capital resources" for a discussion of
this program). Cash from operating activities was also significantly impacted by
changes in working capital. Excluding the sale of accounts receivable in 1999
and 1998, cash used to support net working capital needs was $275.2 million,
$107.7 million and $198.0 million in 1999, 1998 and 1997, respectively. The
revenue growth in France and Italy is the primary reason for the increasing
working capital needs, as it is normal in these markets to have Days Sales
Outstanding in excess of 70 days. Cash provided by operating activities before
working capital changes was $249.7 million, $197.8 million and $223.3 million in
1999, 1998 and 1997, respectively.
Accounts receivable increased to $1,897.6 million at December 31, 1999 from
$1,674.7 million at December 31, 1998. This change is due to the increased sales
levels in all of the Company's major markets, offset by the sale of accounts
receivable and the impact of currency exchange rates. Without the sale of
accounts receivable and at constant exchange rates, receivables would have
increased an additional $25.0 million and $162.1 million, respectively.
Net cash provided by borrowings was $246.6 million in 1999 and $137.8
million in 1997. The additional borrowings were primarily used for working
capital growth and investments in new markets, capital expenditures,
acquisitions and repurchases of the Company's common stock. Cash from operating
activities in 1998 was used to repay borrowings of $9.8 million, for investments
in new markets, capital expenditures and acquisitions, and to repurchase shares
of the Company's common stock.
Cash uses Capital expenditures decreased to $74.7 million in 1999 from $140.8
million in 1998 and $98.6 million in 1997. These expenditures are 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 $3.0 million, $40.1 million and $37.6 million in 1999, 1998 and 1997,
respectively.
From time to time, the Company acquires certain franchises and other
unrelated companies throughout the world. The total cash consideration paid for
acquisitions, net of cash acquired, was $18.8 million in 1999, $31.7 million in
1998 and $16.5 million in 1997.
Subsequent to December 31, 1999, the Company acquired Elan Group Limited
("Elan") and several other companies
23
26
Management's Discussion and Analysis (continued)
of Financial Condition and Results of Operations
throughout the world. The total cost of these acquisitions was $121.7 million,
the majority of which was recorded as intangible assets. In addition, the Elan
acquisition includes approximately $44.0 million of deferred consideration
expected to be paid during 2000 and 2001.
The Board of Directors has authorized the repurchase of 15 million shares
under the Company's share repurchase program. 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. At December 31, 1999, 8.3 million shares at a cost of $229.8 million
have been repurchased under the program, $100.8 million of which were
repurchased during 1999.
The Company paid dividends of $15.3 million, $15.2 million and $13.8
million in 1999, 1998 and 1997, respectively.
Cash and cash equivalents increased $61.2 million in 1999 and $38.2 million
in 1998 compared to a decrease of $38.3 million in 1997.
Capitalization Total capitalization at December 31, 1999 was $1,139.6 million,
comprised of $489.0 million of debt and $650.6 million of equity. Debt as a
percentage of total capitalization increased to 43% in 1999 from 28% in 1998,
due primarily to the repurchases of the Company's common stock during the year.
[BAR GRAPH]
Capital resources In July 1999, the Company issued 200.0 million of 7-year
unsecured notes with an effective interest rate of 5.7%. Net proceeds of $200.9
million from the issuance of these notes were used to repay amounts outstanding
under the Company's unsecured revolving credit agreement and commercial paper
program.
The Company has a $415.0 million unsecured revolving credit agreement that
includes a $90.0 million commitment to be used exclusively for standby letters
of credit. Borrowings of $133.7 million and letters of credit of $57.9 million
were outstanding under the facility at December 31, 1999. The facility matures
on November 25, 2002 and may be increased to a maximum of $500.0 million or
extended for an additional year with the lenders' consent. The agreement
requires, among other things, that the Company comply with an interest coverage
ratio of not less than 3.0 to 1, a debt-to-capitalization ratio of less than .60
to 1 and a maximum subsidiary debt level of $50.0 million. As of December 31,
1999, the Company had an interest coverage ratio of 17.4 to 1, a debt-to-
capitalization ratio (as defined under the agreement) of .46 to 1 and a
subsidiary debt level of $49.0 million.
In November 1999, the Company entered into a $300.0 million revolving
credit agreement. The facility matures on November 22, 2000, and may be extended
for an additional year with the lenders' consent. This agreement has similar
restrictive covenants to the Company's $415.0 million revolving credit
agreement. As of December 31, 1999, the Company had no borrowings under this
agreement.
Borrowings of $14.8 million were outstanding under the Company's $75.0
million U.S. commercial paper program. Commercial paper borrowings, which are
backed by the $415.0 million unsecured revolving credit agreement, have been
classified as long-term debt due to the availability to refinance them on a
long-term basis under the revolving credit facility.
During the first quarter of 2000, the Company issued 150.0 million of
5-year unsecured notes with an effective interest rate of 6.3%. Net proceeds
from the issuance of these notes were used to repay amounts outstanding under
the Company's unsecured revolving credit agreement and commercial paper program.
In addition to the above, the Company and some of its foreign subsidiaries
maintain separate lines of credit with local financial institutions to meet
working capital needs. As of December 31, 1999, such lines totaled $160.4
million, of which $32.5 million was unused.
A wholly owned subsidiary of the Company has an agreement to sell, on an
ongoing basis, up to $200.0 million of an undivided interest in its accounts
receivable. The amount of receivables sold under this agreement totaled $200.0
million and $175.0 million at December 31, 1999 and 1998, respectively. Unless
extended by amendment, the agreement expires in December 2000. (See Note 4 to
the Consolidated Financial Statements for further information.)
24
27
The Company's principal ongoing cash needs are to finance working capital,
capital expenditures, acquisitions and the share repurchase program. Working
capital is primarily in the form of trade receivables, which increase as
revenues increase. The amount of financing necessary to support revenue growth
depends on receivable turnover, which differs in each market in which the
Company operates.
The Company believes that its internally generated funds and its existing
credit facilities are sufficient to cover its near-term projected cash needs.
With continued revenue increases or additional acquisitions or share
repurchases, additional borrowings under the existing facilities would be
necessary to finance the Company's cash needs.
Significant Matters Affecting Results of Operations
Market risks The Company is exposed to the impact of interest rate changes and
foreign currency fluctuations.
Interest Rates--The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's long-term debt obligations. The Company
has historically managed interest rates through the use of a combination of
fixed and variable rate borrowings. During 1999 and the first quarter of 2000,
the Company has replaced a total of 350.0 million of variable rate financing
with long-term, fixed rate notes. The Company believes that the addition of
these notes protects the Company against the recent and anticipated interest
rate increases.
In addition, interest rate swaps may be used to adjust interest rate
exposures when appropriate. Currently, the Company has an interest rate swap
agreement, expiring in 2001, to fix the interest rate at 6.0% on $50.0 million
of the Company's revolving credit borrowings under the revolving credit
agreement. The fair value of this agreement, the impact on cash flows and the
interest expense recorded during 1999 were not material.
A 41 basis point (.41%) move in interest rates on the Company's variable
rate borrowings (10% of the weighted average worldwide interest rate) would have
an immaterial impact on the Company's earnings before income taxes and cash
flows in each of the next five years. In addition, a 41 basis point move in
interest rates would have an immaterial impact on the fair value, interest
expense and cash flows related to the Company's interest rate swap agreement.
Exchange Rates--The Company's exposure to exchange rates relates primarily to
its foreign subsidiaries and its Euro-denominated borrowings. Related to its
foreign subsidiaries, exchange rates impact the U.S. Dollar value of their
reported earnings, the Company's investments in the subsidiaries and the
intercompany transactions with the subsidiaries.
Over 75% of the Company's revenues are generated outside of the United
States. As a result, fluctuations in the value of foreign currencies against the
dollar may have a significant impact on the reported results of the Company.
Revenues and expenses denominated in foreign currencies are translated into
United States dollars at the weighted average exchange rate for the year.
Consequently, as the value of the dollar strengthens relative to other
currencies in the Company's major markets, as it did on average in 1999, the
resulting translated revenues, expenses and operating profits are lower. Using
constant exchange rates, 1999 revenues and operating profits would have been
approximately 3% higher than reported.
Fluctuations in currency exchange rates also impact the U.S. Dollar amount
of shareholders' equity of the Company. The assets and liabilities of the
Company's non-U.S. subsidiaries are translated into United States dollars at the
exchange rates in effect at year-end. The resulting translation adjustments are
recorded in shareholders' equity as Accumulated other comprehensive income
(loss). The dollar was stronger relative to many of the foreign currencies at
December 31, 1999 compared to December 31, 1998. Consequently, the Accumulated
other comprehensive income (loss) component of shareholders' equity decreased
$70.9 million during the year. Using the year-end exchange rates, the total
amount permanently invested in non-U.S. subsidiaries at December 31, 1999 is
approximately $1.6 billion.
During 1999 and the first quarter of 2000, the Company has issued 350.0
million of Euro-denominated notes. These notes provide a hedge of the Company's
net investment in its European subsidiaries with Euro functional currencies.
Since the Company's net investment in these subsidiaries exceeds the amount of
the notes, all translation gains or losses related to these notes is included as
a component of Accumulated other comprehensive income (loss). The Accumulated
other comprehensive income (loss) component of shareholders' equity increased
$1.5 million during the year due to the currency impact on these notes.
25
28
Management's Discussion and Analysis (continued)
of Financial Condition and Results of Operations
Although currency fluctuations impact the Company's reported results and
shareholders' equity, such fluctuations generally do not affect the Company's
cash flow or result in actual economic gains or losses. Each of the Company's
subsidiaries derives revenues and incurs expenses within a single country and
consequently, does not generally incur currency risks in connection with the
conduct of its normal business operations. The Company generally has few cross
border transfers of funds, except for transfers to the United States to fund the
expense of the Company's international headquarters and working capital loans
made from the United States to the Company's foreign subsidiaries. To reduce the
currency risk related to the loans, the Company may borrow funds under the
Revolving Credit Agreement in the foreign currency to lend to the subsidiary, or
alternatively, may enter into a forward contract to hedge the loan. Foreign
exchange gains and losses recognized on any transactions are included in the
Consolidated Statements of Operations and historically have been immaterial. The
Company generally does not engage in hedging activities, except as discussed
above. The Company did not hold any derivative instruments, except the interest
rate swap discussed above, at December 31, 1999.
The Company holds a 49% interest in its Swiss franchise, which holds an
investment portfolio of approximately $66.3 million as of December 31, 1999.
This portfolio is invested in a wide diversity of European and U.S. debt and
equity securities as well as various professionally managed funds. To the extent
that there are gains or losses related to this portfolio, the Company's
ownership share is included in its consolidated operating results.
Impact of economic conditions Because one of the principal attractions of using
temporary staffing solutions is to maintain a flexible supply of labor to meet
changing economic conditions, the industry has been and remains sensitive to
economic cycles. To help counter the effects of these economic cycles, the
Company continues to provide a diversified service mix, including office,
industrial, professional and call center resources and expertise, and a variety
of workforce management solutions, including recruiting, training and managing
temporary and permanent staff. While the Company believes that the wide spread
of its operations and the diversity of its service mix and solutions cushions it
against the impact of an adverse economic cycle in any single country or
industry, adverse economic conditions in any of its three largest markets would
likely have a material impact on the Company's consolidated operating results.
Year 2000 The Company has not encountered any significant problems with its IT
or non-IT systems due to the Year 2000 Issue. Likewise, no significant
franchisees, vendors or customers have encountered Year 2000 Issues that are
expected to impact the Company.
To address its potential Year 2000 Issues, the Company used both external
and internal resources for the assessment, remediation and testing of its IT and
non-IT systems. The Company expensed a total of $11.6 million for external
resources. Hardware purchases directly related to the Year 2000 project were
minimal.
The Euro On January 1, 1999, 11 of the 15 member countries of the European Union
(the "participating countries") established fixed conversion rates between their
existing sovereign currencies (the "legacy currencies") and the Euro and have
agreed to adopt the Euro as their common legal currency. The legacy currencies
will remain legal tender in the participating countries as denominations of the
Euro between January 1, 1999 and January 1, 2002 (the "transition period").
During the transition period, public and private parties may pay for goods and
services using either the Euro or the participating country's legacy currency.
The Company is currently assessing the impact of the Euro in its business
operations in all participating countries. Since the Company's labor costs and
prices are generally determined on a local basis, the near-term impact of the
Euro is expected to be primarily related to making internal information systems
modifications to meet customer invoicing and external reporting requirements.
Such modifications relate to converting currency values and to operating in a
dual currency environment during the transition period. Modifications of
internal information systems will occur throughout the transition period and
will be coordinated with other system-related upgrades and enhancements. The
Company will expense all such system modification costs as incurred and does not
expect such costs to be material to the Company's financial results.
Legal regulations and union relationships The temporary employment services
industry is closely regulated in all of the major markets in which the Company
operates except the United
26
29
States and Canada. In addition to licensing or registration requirements, many
countries impose substantive restrictions on temporary employment services,
either on the temporary staffing company or the ultimate client company. They
may restrict the length of temporary assignments, the type of work permitted for
temporary workers or the occasions on which temporary 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 temporary employment
services firms may operate. These changes could impose additional costs or
taxes, additional record keeping or reporting requirements; restrict the tasks
to which temporaries may be assigned; limit the duration of or otherwise impose
restrictions on the nature of the temporary relationship (with the Company or
the client) or otherwise adversely affect the industry.
In many markets, the existence or absence of collective bargaining
agreements with labor organizations has a significant impact on the Company's
operations and the ability of customers to utilize the Company's services. In
some markets, labor agreements are structured on a national or industry-wide
(rather than a company) basis. Changes in these collective labor agreements have
occurred in the past and are expected in the future and may have a material
impact on the operations of temporary staffing firms, including the Company.
Forward-looking statements Certain information included or incorporated by
reference in this filing and identified by use of the words "expects,"
"believes," "plans" or the like constitutes forward-looking statements, as such
term is defined in Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. In addition, any information included or
incorporated by reference in future filings by the Company with the Securities
and Exchange Commission, as well as information contained in written material,
releases and oral statements issued by or on behalf of the Company may include
forward-looking statements. All statements which address operating performance,
events or developments that the Company expects or anticipates will occur or
future financial performance are forward-looking statements.
These forward-looking statements speak only as of the date on which they
are made. They rely on a number of assumptions concerning future events and are
subject to a number of risks and uncertainties, many of which are outside of the
Company's control, that could cause actual results to differ materially from
such statements. These risks and uncertainties include, but are not limited to:
- - material changes in the demand from larger customers, including customers
with which the Company has national or global arrangements
- - availability of temporary workers or workers with the skills required by
customers
- - increases in the wages paid to temporary workers - competitive market
pressures, including pricing pressures
- - ability to successfully invest in and implement information systems
- - unanticipated technological changes, including obsolescence or impairment
of information systems
- - changes in customer attitudes toward the use of staffing services
- - government, tax or regulatory policies adverse to the employment services
industry
- - general economic conditions in international markets
- - interest rate and exchange rate fluctuations
The Company disclaims any obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Accounting changes The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," in June 1998. This statement
establishes accounting and reporting standards requiring that every derivative
instrument be recorded on the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met, in which case the gains or losses would
offset the related results of the hedged item. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of FASB Statement No. 133," which
defers the required adoption date of SFAS No. 133 until 2001 for the Company,
however, early adoption is allowed. The Company has not yet determined the
timing or method of adoption or quantified the impact of adopting this
statement. While the statement could increase volatility in earnings and other
comprehensive income, it is not expected to have a material impact on the
Consolidated Financial Statements.
27
30
Report of Independent Public Accountants
To the Board of Directors and Shareholders
of Manpower Inc.:
We have audited the accompanying consolidated balance sheets of Manpower Inc. (a
Wisconsin corporation) and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of operations, cash flows and shareholders'
equity for each of the three years in the period ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Manpower
Inc. and subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
February 3, 2000
28
31
Consolidated Statements of Operations
(in millions, except per share data)
Year Ended December 31
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
Revenues from services $9,770.1 $8,814.3 $7,258.5
Cost of services 8,065.2 7,311.3 5,948.3
- -----------------------------------------------------------------------------------------------------------------
Gross profit 1,704.9 1,503.0 1,310.2
Selling and administrative expenses 1,474.3 1,280.5 1,054.8
Write-down of capitalized software -- 92.1 --
- -----------------------------------------------------------------------------------------------------------------
Operating profit 230.6 130.4 255.4
Interest and other expense 24.8 16.6 6.2
- -----------------------------------------------------------------------------------------------------------------
Earnings before income taxes 205.8 113.8 249.2
Provision for income taxes 55.8 38.1 85.3
- -----------------------------------------------------------------------------------------------------------------
Net earnings $ 150.0 $ 75.7 $ 163.9
=================================================================================================================
Net earnings per share $ 1.94 $ .94 $ 2.01
=================================================================================================================
Net earnings per share--diluted $ 1.91 $ .93 $ 1.97
=================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
Supplemental Systemwide Information (Unaudited)
(dollars in millions)
Year Ended December 31
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
Systemwide sales $11,511.4 $10,523.4 $ 8,899.9
Systemwide offices at year-end 3,396 3,189 2,776
=================================================================================================================
Systemwide information represents total of Company-owned branches and
franchises.
29
32
Consolidated Balance Sheets
(in millions, except share data)
December 31
Assets 1999 1998
- ----------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 241.7 $ 180.5
Accounts receivable, less allowance for doubtful accounts
of $47.1 and $39.5, respectively 1,897.6 1,674.7
Prepaid expenses and other assets 66.0 53.6
Future income tax benefits 52.0 52.8
- ----------------------------------------------------------------------------------------------------------------
Total current assets 2,257.3 1,961.6
Other Assets:
Investments in licensees 37.0 33.1
Other assets 242.0 205.7
- ----------------------------------------------------------------------------------------------------------------
Total other assets 279.0 238.8
Property and Equipment:
Land, buildings, leasehold improvements and equipment 416.1 411.4
Less: accumulated depreciation and amortization 233.7 220.1
- ----------------------------------------------------------------------------------------------------------------
Net property and equipment 182.4 191.3
- ----------------------------------------------------------------------------------------------------------------
Total assets $2,718.7 $2,391.7
================================================================================================================
30
33
December 31
Liabilities and Shareholders' Equity 1999 1998
- ------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 388.0 $ 347.9
Employee compensation payable 71.9 77.1
Accrued liabilities 180.2 172.0
Accrued payroll taxes and insurance 340.9 319.0
Value added taxes payable 305.6 291.7
Short-term borrowings and current maturities of long-term debt 131.5 103.4
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,418.1 1,311.1
Other Liabilities:
Long-term debt 357.5 154.6
Other long-term liabilities 292.5 257.1
- ------------------------------------------------------------------------------------------------------------------
Total other liabilities 650.0 411.7
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 84,272,460 and 83,279,149 shares, respectively .8 .8
Capital in excess of par value 1,621.4 1,602.7
Accumulated deficit (653.0) (787.7)
Accumulated other comprehensive income (loss) (88.8) (17.9)
Treasury stock at cost, 8,286,400 and 4,349,400 shares, respectively (229.8) (129.0)
- ------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 650.6 668.9
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $2,718.7 $2,391.7
==================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.
31
34
Consolidated Statements of Cash Flows
(in millions)
Year Ended December 31
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net earnings $ 150.0 $ 75.7 $ 163.9
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization 63.7 55.6 41.6
Deferred income taxes 15.3 (37.5) 2.0
Provision for doubtful accounts 20.7 12.0 15.9
Write-down of capitalized software -- 92.1 --
Change in operating assets and liabilities:
Sale of accounts receivable 25.0 175.0 --
Accounts receivable, net of sale (457.4) (353.2) (398.8)
Other assets (51.7) 9.5 (20.2)
Other liabilities 233.9 236.0 220.9
- -------------------------------------------------------------------------------------------------------------------
Cash (used) provided by operating activities (.5) 265.2 25.3
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital expenditures (74.7) (140.8) (98.6)
Acquisitions of businesses, net of cash acquired (18.8) (31.7) (16.5)
Proceeds from the sale of property and equipment 14.9 1.0 2.8
- -------------------------------------------------------------------------------------------------------------------
Cash used by investing activities (78.6) (171.5) (112.3)
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Net change in payable to banks 45.5 23.1 50.2
Proceeds from long-term debt 460.4 22.7 90.2
Repayment of long-term debt (259.3) (55.6) (2.5)
Proceeds from stock option and purchase plans 18.7 12.0 10.8
Repurchase of common stock (100.8) (43.9) (81.9)
Dividends paid (15.3) (15.2) (13.8)
- -------------------------------------------------------------------------------------------------------------------
Cash provided (used) by financing activities 149.2 (56.9) 53.0
- -------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (8.9) 1.4 (4.3)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 61.2 38.2 (38.3)
Cash and cash equivalents, beginning of year 180.5 142.3 180.6
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 241.7 $ 180.5 $ 142.3
===================================================================================================================
Supplemental Cash Flow Information:
Interest paid $ 12.4 $ 18.9 $ 11.3
===================================================================================================================
Income taxes paid 66.9 69.0 92.8
===================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
32
35
Consolidated Statements of Shareholders' Equity
(in millions, except per share data)
Accumulated
Capital in Other
Common Excess of Par Accumulated Comprehensive Treasury
Stock Value Deficit Income (Loss) Stock Total
- -------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $ .8 $1,579.9 $ (998.3) $ 21.5 $ (3.2) $ 600.7
Comprehensive income:
Net earnings 163.9
Foreign currency translation (62.2)
Total comprehensive income 101.7
Issuances under option and purchase plans 10.8 10.8
Dividends ($.17 per share) (13.8) (13.8)
Repurchases of common stock (81.9) (81.9)
- -------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 .8 1,590.7 (848.2) (40.7) (85.1) 617.5
Comprehensive income:
Net earnings 75.7
Foreign currency translation 22.8
Total comprehensive income 98.5
Issuances under option and purchase plans 12.0 12.0
Dividends ($.19 per share) (15.2) (15.2)
Repurchases of common stock (43.9) (43.9)
- -------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 .8 1,602.7 (787.7) (17.9) (129.0) 668.9
Comprehensive income:
Net earnings 150.0
Foreign currency translation (70.9)
Total comprehensive income 79.1
Issuances under option and purchase plans 18.7 18.7
Dividends ($.20 per share) (15.3) (15.3)
Repurchases of common stock (100.8) (100.8)
- -------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $ .8 $1,621.4 $ (653.0) $ (88.8) $(229.8) $ 650.6
=========================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
33
36
Notes to Consolidated Financial Statements
(in millions, except share data)
(1) Summary of Significant Accounting Policies Nature of operations Manpower
Inc. (the "Company") is an employment services organization with almost 3,400
systemwide offices in 52 countries. The Company's largest operations, based on
revenues, are located in the United States, France and the United Kingdom. The
Company provides a range of staffing and workplace management solutions,
including temporary help, contract services and training and testing of
temporary and permanent workers. The Company provides employment services to a
wide variety of customers, none of which individually comprise a significant
portion of revenues within a given geographic region or for the Company as a
whole.
Basis of consolidation The consolidated financial statements include the
accounts of the Company and all subsidiaries. For subsidiaries in which the
Company has an ownership interest of 50% or less, but more than 20%, the
consolidated financial statements reflect the Company's ownership share of those
earnings using the equity method of accounting. These investments are included
as Investments in licensees in the Consolidated Balance Sheets. Included in
shareholders' equity at December 31, 1999 are $32.0 of unremitted earnings from
investments accounted for using the equity method. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Revenues The Company generates revenues from sales of services by its own
branch operations and from fees earned on sales of services by its franchise
operations. Franchise fees, which are included in Revenues from services, were
$37.7, $37.8 and $37.5 for the years ended December 31, 1999, 1998 and 1997,
respectively.
New accounting pronouncements The Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities" in June 1998. This statement
establishes accounting and reporting standards requiring that every derivative
instrument be recorded on the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met, in which case the gains or losses would
offset the related results of the hedged item. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of FASB Statement No. 133" which
defers the required adoption date of SFAS No. 133 until 2001 for the Company,
however, early adoption is allowed. The Company has not yet determined the
timing or method of adoption or quantified the impact of adopting this
statement. While the statement could increase volatility in earnings and
Accumulated other comprehensive income (loss), it is not expected to have a
material impact on the Consolidated Financial Statements.
Accounts receivable securitization The Company accounts for the securitization
of accounts receivable in accordance with SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities."
At the time the receivables are sold, the balances are removed from the
Consolidated Balance Sheets. Costs associated with the sale of receivables,
primarily related to the discount and loss on sale, are included in other
expense in the Consolidated Statements of Operations.
Foreign currency translation The financial statements of the Company's non-U.S.
subsidiaries have been translated in accordance with SFAS No. 52. Under SFAS No.
52, asset and liability accounts are translated at the current exchange rate and
income statement items are translated at the weighted average exchange rate for
the year. The resulting translation adjustments are recorded as Accumulated
other comprehensive income (loss), which is a component of Shareholders' Equity.
In accordance with SFAS No. 109, no deferred taxes have been recorded related to
the cumulative translation adjustments.
Translation adjustments for those operations in highly inflationary
economies and certain other transaction adjustments are included in earnings.
Historically these adjustments have been immaterial to the Consolidated
Financial Statements.
Capitalized software The Company capitalizes purchased software as well as
internally developed software. Internal software development costs are
capitalized from the time
34
37
the internal use software is considered probable of completion until the
software is ready for use. Business analysis, system evaluation, selection and
software maintenance costs are expensed as incurred. Capitalized software costs
are amortized using the straight-line method over the estimated useful life of
the software. The Company regularly reviews the carrying value of all
capitalized software and recognizes a loss when the carrying value is considered
unrealizable. (See Note 5 to the Consolidated Financial Statements for further
information.)
Intangible assets Intangible assets consist primarily of trademarks and the
excess of cost over the fair value of net assets acquired. Trademarks are
amortized on a straight-line basis over their useful lives. The excess of cost
over the fair value of net assets acquired is amortized on a straight-line basis
over its useful life, estimated based on the facts and circumstances surrounding
each individual acquisition, not to exceed 20 years. The intangible asset and
related accumulated amortization are removed from the Consolidated Balance
Sheets when the intangible asset becomes fully amortized. The Company regularly
reviews the carrying value of all intangible assets and recognizes a loss when
the unamortized balance is considered unrealizable. Total intangible assets of
$89.4 and $84.3, net of accumulated amortization of $16.3 and $12.8 at December
31, 1999 and 1998, respectively, are included in Other assets in the
Consolidated Balance Sheets. Amortization expense was $6.9, $5.4 and $4.4 in
1999, 1998 and 1997, respectively.
Property and equipment A summary of property and equipment at December 31 is as
follows:
1999 1998
- -----------------------------------------------------------
Land $ 1.4 $ 1.4
Buildings 20.4 19.8
Other office furniture and equipment 266.3 261.1
Leasehold improvements 128.0 129.1
- -----------------------------------------------------------
$416.1 $411.4
===========================================================
Property and equipment are stated at cost and depreciated using the
straight-line method over the following estimated useful lives: buildings--up to
40 years; leasehold improvements--lesser of life of asset or lease term;
furniture and equipment--three to ten years. Expenditures for renewals and
betterments are capitalized whereas expenditures for repairs and maintenance are
charged to income as incurred. Upon sale or disposition of properties, the
difference between unamortized cost and the proceeds is charged or credited to
income.
Shareholders' equity The Board of Directors has authorized the repurchase of up
to 15 million shares of stock under the Company's share repurchase program.
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. Total shares repurchased
under the program at December 31, 1999 and 1998, were 8.3 million and 4.3
million shares, respectively, at a cost of $229.8 and $129.0, respectively.
Advertising costs The Company generally expenses production costs of media
advertising as they are incurred. Advertising expenses, including the
sponsorship of the Millennium Dome and the 1998 World Cup, were $39.6, $41.7 and
$21.6 in 1999, 1998 and 1997, respectively.
Statement of cash flows The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
Use of estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Reclassifications Certain amounts in the 1998 and 1997 financial statements
have been reclassified to be consistent with the current year presentation.
35
38
Notes to Consolidated Financial Statements (continued)
(in millions, except share data)
(2) Earnings per Share The calculation of net earnings per share for the years
ended December 31, 1999, 1998 and 1997, is as follows:
1999 1998 1997
- --------------------------------------------------------------------
Net earnings per share:
Net earnings available to
common shareholders $150.0 $ 75.7 $163.9
Weighted average common
shares outstanding (in millions) 77.3 80.1 81.6
- --------------------------------------------------------------------
$ 1.94 $ .94 $ 2.01
====================================================================
The calculation of net earnings per share--diluted for the years ended
December 31, 1999, 1998 and 1997, is as follows:
1999 1998 1997
- --------------------------------------------------------------------
Net earnings per share--
diluted:
Net earnings available to
common shareholders $150.0 $ 75.7 $163.9
Weighted average common
shares outstanding (in millions) 77.3 80.1 81.6
Effect of dilutive securities--
Stock options (in millions) 1.4 1.1 1.8
- --------------------------------------------------------------------
78.7 81.2 83.4
- --------------------------------------------------------------------
$ 1.91 $ .93 $ 1.97
====================================================================
The calculation of net earnings per share--diluted for the years ended
December 31, 1999, 1998 and 1997 does not include certain stock option grants
because the exercise price for these options is greater than the average market
price of the common shares during that year. The number, exercise prices and
weighted average remaining life of these antidilutive options is as follows:
1999 1998 1997
- --------------------------------------------------------------------
Shares (000) 1,146 625 10
Exercise prices $27-$49 $32-$49 $49
Weighted average
remaining life 7.9 years 8.1 years 9.6 years
====================================================================
(3) Income Taxes The provision for income taxes consists of:
1999 1998 1997
- --------------------------------------------------------------------
Current:
United States:
Federal $ (4.0) $ 9.9 $ 14.4
State 5.6 3.3 2.1
Foreign 38.9 62.4 66.8
- --------------------------------------------------------------------
Total current 40.5 75.6 83.3
- --------------------------------------------------------------------
Deferred:
United States:
Federal (4.2) (21.3) 14.0
State (.6) (3.7) .8
Foreign 20.1 (12.5) (12.8)
- --------------------------------------------------------------------
Total deferred 15.3 (37.5) 2.0
- --------------------------------------------------------------------
Total provision $ 55.8 $ 38.1 $ 85.3
====================================================================
A reconciliation between taxes computed at the United States Federal
statutory tax rate of 35% and the consolidated effective tax rate is as follows:
1999 1998 1997
- --------------------------------------------------------------------
Income tax based on
statutory rate $ 72.0 $ 39.8 $ 87.2
Increase (decrease)
resulting from:
Foreign tax rate
differences 3.9 3.2 2.3
State income taxes 2.6 (.4) 2.9
Benefit on dissolution(a) (15.7) -- --
Tax effect of foreign
repatriations (11.3) 2.8 (1.1)
Change in valuation reserve 5.0 (7.6) (3.6)
Other, net (.7) .3 (2.4)
- --------------------------------------------------------------------
Total provision $ 55.8 $ 38.1 $ 85.3
====================================================================
(a) The Benefit on dissolution of $15.7 represents the one-time tax benefit
realized during 1999 related to the dissolution of a non-operating subsidiary.
36
39
Deferred income taxes are recorded on temporary differences at the tax rate
expected to be in effect when the temporary differences reverse. Temporary
differences which gave rise to the deferred tax assets at December 31 are as
follows:
1999 1998
- --------------------------------------------------------------------
Current future income tax benefits:
Accrued payroll taxes and insurance $ 18.6 $ 18.7
Employee compensation payable 12.9 11.9
Other 21.8 24.7
Valuation allowance (1.3) (2.5)
- --------------------------------------------------------------------
52.0 52.8
- --------------------------------------------------------------------
Noncurrent future income tax
benefits:
Accrued payroll taxes and insurance 29.6 24.7
Pension and postretirement benefits 20.7 16.6
Net operating losses and other 14.7 42.6
Valuation allowance (24.6) (18.4)
- --------------------------------------------------------------------
40.4 65.5
- --------------------------------------------------------------------
Total future tax benefits $ 92.4 $118.3
====================================================================
Noncurrent future income tax benefits have been classified as Other assets
in the Consolidated Balance Sheets.
The Company has foreign net operating loss carryforwards totaling $59.5
that expire as follows: 2000-$.2, 2001-$.2, 2002-$.1, 2003-$.5, 2004-$1.0, 2005
and thereafter- $51.8 and $5.7 with no expiration. The Company has U.S. State
net operating loss carryforwards totaling $190.7 that expire as follows:
2003-$10.4, 2004-$80.6, 2005 and thereafter- $99.7. The Company has recorded a
deferred tax asset of $37.2 at December 31, 1999, for the benefit of these net
operating losses. Realization of this asset is dependent on generating
sufficient taxable income prior to the expiration of the loss carryforwards. A
valuation allowance of $23.5 has been recorded at December 31, 1999, as
management believes that realization of certain loss carryforwards is unlikely.
Pretax income of foreign operations was $169.1, $145.2 and $166.9 in 1999,
1998 and 1997, respectively. United States income taxes have not been provided
on undistributed earnings of foreign subsidiaries that are considered to be
permanently invested. If such earnings were remitted, foreign tax credits would
substantially offset any resulting United States income tax. At December 31,
1999, the estimated amount of unremitted earnings of the foreign subsidiaries
totaled $557.5.
(4) Accounts Receivable Securitization The Company and certain of its U.S.
subsidiaries entered into an agreement (the "Receivables Facility") in December
1998 with a financial institution whereby it sells on a continuous basis an
undivided interest in all eligible trade accounts receivable. Pursuant to the
Receivables Facility, the Company formed Ironwood Capital Corporation ("ICC"), a
wholly-owned, special purpose, bankruptcy-remote subsidiary. ICC was formed for
the sole purpose of buying and selling receivables generated by the Company and
certain subsidiaries of the Company. Under the Receivables Facility, the Company
and certain subsidiaries, irrevocably and without recourse, transfer all of
their accounts receivables to ICC. ICC, in turn, has sold and, subject to
certain conditions, may from time to time sell an undivided interest in these
receivables and is permitted to receive advances of up to $200.0 for the sale of
such undivided interest. The agreement expires in December 2000.
This two-step transaction is accounted for as a sale of receivables under
the provisions of SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities." There was $200.0 and $175.0
advanced under the Receivables Facility at December 31, 1999 and 1998,
respectively, and accordingly, that amount of accounts receivable has been
removed from the Consolidated Balance Sheets. Costs associated with the sale of
receivables, primarily related to the discount and loss on sale, were $9.8 and
$.7 in 1999 and 1998, respectively, and are included in other expenses in the
Consolidated Statements of Operations.
(5) Write-down of Capitalized Software In accordance with its ongoing review of
capitalized software, in December 1998 the Company recorded a $92.1 ($57.1 after
tax, or $.70 per share on a diluted basis) non-cash charge to write off the
carrying value of software costs and certain hardware and network infrastructure
costs related to the development of a complex and proprietary information system
for its North American branch office administration, invoicing and payroll
processing. This comprehensive information system had been under development for
several years and portions of the system were in field testing and deployment.
After a period of field testing, management and the Board of Directors
decided in December 1998 that it was necessary to significantly alter the
technological architecture of the system in order to reduce ongoing support,
maintenance and communications
37
40
Notes to Consolidated Financial Statements (continued)
(in millions, except share data)
costs. This decision required the application software under development to be
abandoned and a new application to be purchased or developed for the new
architecture. In addition to the developed software, certain hardware, network
infrastructure and software licenses were also abandoned as a result of the
change in system architecture. The non-cash charge included the costs of
abandoning all of these assets.
The net capitalized software balance of $6.3 and $6.7 as of December 31,
1999 and 1998, respectively, is included in Other assets in the Consolidated
Balance Sheets.
(6) Debt Information concerning short-term borrowings at December 31 is as
follows:
1999 1998
- --------------------------------------------------------------------
Payable to banks $127.9 $ 99.3
Average interest rates 3.9% 3.5%
- --------------------------------------------------------------------
The Company and some of its foreign subsidiaries maintain lines of credit
with foreign financial institutions to meet short-term working capital needs.
Such lines totaled $160.4 at December 31, 1999, of which $32.5 was unused. The
Company has no significant compensating balance requirements or commitment fees
related to these lines.
A summary of long-term debt at December 31 is as follows:
1999 1998
- --------------------------------------------------------------------
Euro-denominated notes, at a rate of 5.7% $201.2 $ --
Commercial paper, maturing within
90 days, at average interest rates of
6.3% and 5.5%, respectively 14.8 72.0
Revolving credit agreements:
U.S. dollar-denominated borrowings, at
a rate of 6.4% and 5.8%, respectively 95.0 40.0
Yen-denominated borrowings, at
a rate of .5% and .6%, respectively 38.7 35.3
Other 11.4 11.4
- --------------------------------------------------------------------
361.1 158.7
Less--Current maturities 3.6 4.1
- --------------------------------------------------------------------
Long-term debt $357.5 $154.6
- --------------------------------------------------------------------
Euro Notes In July 1999, the Company issued Euro 200.0 in unsecured notes due in
July 2006. Net proceeds of $200.9 from the issuance of these notes were used to
repay amounts outstanding under the Company's unsecured revolving credit
agreement and commercial paper program.
These notes provide a hedge of the Company's net investment in its European
subsidiaries with Euro functional currencies. Since the Company's net investment
in these subsidiaries exceeds the amount of the notes, all translation gains or
losses related to these notes is included as a component of Accumulated other
comprehensive income (loss).
Revolving Credit Agreements The Company has a $415.0 unsecured revolving credit
agreement that allows for borrowings in various currencies and includes a $90.0
commitment to be used exclusively for standby letters of credit. Outstanding
letters of credit totaled $57.9 and $48.2 as of December 31, 1999 and 1998,
respectively. Approximately $176.5 of additional borrowings were available to
the Company under this agreement at December 31, 1999.
The interest rate and facility fee on the entire line and
the issuance fee on the letter of credit commitment related to this agreement
vary based on the Company's debt rating and borrowing level. Currently, the
interest rate is LIBOR plus .2%, and the fees are .1% and .4%, respectively. The
facility matures on November 25, 2002, and may be increased to a maximum of
$500.0 or extended for an additional year with the lenders' consent. The
agreement requires, among other things, that the Company comply with minimum
interest coverage and debt-to-capitalization ratios and a maximum subsidiary
debt level.
In November 1999, the Company entered into a $300.0 revolving credit
agreement. The interest rate and facility fee on the entire line and the
participation fee vary based on the Company's debt rating and borrowing level.
Currently, the fees are .1% and .1%, respectively. The facility matures on
November 22, 2000, and may be extended for an additional year with the lenders'
consent. This agreement has similar restrictive covenants to the Company's
$415.0 revolving credit agreement. As of December 31, 1999, the Company had no
borrowings under this agreement.
The Company has an interest rate swap agreement, expiring in 2001, to fix
the interest rate at 6.0% on $50.0 of the Company's borrowings under the
revolving credit agreements.
38
41
The fair value of this agreement and the impact on the interest expense recorded
during 1999 and 1998 were not material.
Other Due to the availability of long-term financing, commercial paper
borrowings have been classified as long-term debt. The carrying value of
long-term debt approximates fair value, except for the Euro-denominated notes,
which have a fair value of $191.6.
The maturities of long-term debt payable within each of the four years
subsequent to December 31, 2000 are as follows: 2001-$2.2, 2002-$149.6,
2003-$.2, 2004-$.1 and thereafter-$205.4.
(7) Stock Compensation Plans The Company accounts for all of its fixed stock
option plans and the 1990 Employee Stock Purchase Plan in accordance with APB
Opinion No. 25 and related Interpretations. Accordingly, no compensation cost
related to these plans was charged against earnings in 1999, 1998 and 1997. Had
the Company determined compensation cost consistent with the method of SFAS No.
123, the Company's net earnings and net earnings per share would have been
reduced to the pro forma amounts indicated as follows:
1999 1998 1997
- --------------------------------------------------------------------
Net earnings:
as reported $150.0 $75.7 $163.9
pro forma 146.4 74.4 162.5
Net earnings per share:
as reported $ 1.94 $ .94 $ 2.01
pro forma 1.90 .93 1.99
Net earnings per share-diluted:
as reported $ 1.91 $ .93 $ 1.97
pro forma 1.86 .92 1.95
- --------------------------------------------------------------------
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997, respectively: risk-free
interest rates of 5.6%, 4.5% and 5.8%; expected volatility of 17.2%, 24.4% and
14.4%; dividend yield of .5% in all years; and expected lives of 7.6 years, 5.7
years and 5.0 years. The weighted-average fair value of options granted was
$6.16, $4.36 and $5.48 in 1999, 1998 and 1997, respectively.
Fixed stock option plans The Company has reserved 7,625,000 shares of common
stock for issuance under the Executive Stock Option and Restricted Stock Plans.
Under the plans, all full-time employees of the Company are eligible to receive
stock options, purchase rights and restricted stock. The options, rights and
stock are granted to eligible employees at the discretion of a committee
appointed by the Board of Directors.
All options have generally been granted at a price equal to the fair market
value of the Company's common stock at the date of grant. The purchase price per
share pursuant to a purchase right is determined by the Board of Directors. The
committee also determines the period during which options and rights are
exercisable. Generally, options are granted with a vesting period of up to five
years and expire ten years from the date of grant. Rights may generally be
exercised for up to sixty days from the date of grant. Under the plans, the
committee may also authorize the granting of stock appreciation rights and cash
equivalent rights in conjunction with the stock options and purchase rights,
respectively. As of December 31, 1999, no purchase rights, stock appreciation
rights or cash equivalent rights had been granted.
The Company has reserved 800,000 shares of common stock for issuance under
the 1991 Directors Stock Option Plan. Under the plan, each non-employee director
of the Company may receive an option to purchase shares of the Company's common
stock in lieu of cash compensation. The number of shares covered by the option
is determined pursuant to a formula set forth in the plan. The per share
purchase price for each option awarded is equal to the fair market value of the
Company's common stock at the date of grant. Options are exercisable for the
vested portion during the director's tenure and a limited period thereafter.
The Company also has the Savings Related Share Option Scheme for United
Kingdom employees with at least one year of service. These employees are offered
the opportunity to obtain an option for a specified number of shares of common
stock at not less than 85% of the market value of the stock on the day prior to
the offer to participate in the plan. Options vest after either 3, 5 or 7 years,
but may lapse earlier. Funds used to purchase the shares are accumulated through
specified payroll deductions over a 60-month period.
39
42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions, except share data)
Information related to options outstanding under the plans, and the related
weighted-average exercise prices, is as follows:
1999 1998 1997
- --------------------------------------------------------------------------------
Shares Shares Shares
(000) Price (000) Price (000) Price
- --------------------------------------------------------------------------------
Options
outstanding,
beginning
of period 3,840 $ 21 3,362 $ 21 3,421 $ 19
Granted 1,119 26 930 24 384 35
Exercised (496) 17 (237) 15 (374) 17
Expired or
cancelled (92) 25 (215) 35 (69) 24
- --------------------------------------------------------------------------------
Options
outstanding,
end of period 4,371 $ 23 3,840 $ 21 3,362 $ 21
- --------------------------------------------------------------------------------
Options
exercisable,
end of period 2,055 $ 20 2,354 $ 17 2,378 $ 16
- --------------------------------------------------------------------------------
Options outstanding as of December 31, 1999 are as follows:
Options outstanding Options exercisable
- --------------------------------------------------------------------------------
Weighted-
average Weighted- Weighted-
remaining average average
Exercise Shares contractual exercise Shares exercise
prices (000) life price (000) price
- --------------------------------------------------------------------------------
$10-$15 456 1.7 $12 272 $13
16- 20 1,176 3.4 16 1,099 16
21- 30 1,815 8.5 24 424 24
31- 35 685 8.5 34 102 32
36- 49 239 7.0 38 158 37
- --------------------------------------------------------------------------------
4,371 6.3 $23 2,055 $20
- --------------------------------------------------------------------------------
Other stock plans The Company has reserved 2,250,000 shares of common stock for
issuance under the 1990 Employee Stock Purchase Plan. Under the plan, designated
Manpower employees meeting certain service requirements may purchase shares of
the Company's common stock through payroll deductions. These shares may be
purchased at the lesser of 85% of their fair market value at the beginning or
end of each year. During 1999, 1998 and 1997, 138,500, 155,500 and 239,200
shares, respectively, were purchased under the plan.
(8) Retirement Plans Defined benefit plans The Company sponsors several
qualified and nonqualified pension plans covering substantially all permanent
employees. The reconciliation of the changes in the plans' benefit obligations
and the fair value of plan assets and the statement of the funded status of the
plans are as follows:
U.S. Plans Non-U.S. Plans
- --------------------------------------------------------------------------------
1999 1998 1999 1998
- --------------------------------------------------------------------------------
Change in benefit obligation:
Benefit obligation,
beginning of year $ 31.1 $26.8 $49.9 $35.9
Service cost 1.6 1.2 4.0 3.0
Interest cost 2.4 1.9 2.7 2.4
Special termination benefits 8.0 -- -- --
Actuarial (gain) loss (3.2) 2.3 3.3 8.0
Plan participant contributions -- -- 1.0 .9
Benefits paid (1.7) (1.1) (1.8) (1.8)
Currency exchange
rate changes -- -- (.9) 1.5
- --------------------------------------------------------------------------------
Benefit obligation, end of year 38.2 31.1 58.2 49.9
- --------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets,
beginning of year 25.7 26.2 44.2 36.4
Actual return on plan assets 5.8 .2 7.3 4.6
Plan participant contributions -- -- 1.0 .9
Company contributions 1.1 .4 3.0 2.8
Benefits paid (1.7) (1.1) (1.8) (1.8)
Currency exchange
rate changes -- -- (.3) 1.3
- --------------------------------------------------------------------------------
Fair value of plan assets,
end of year 30.9 25.7 53.4 44.2
- --------------------------------------------------------------------------------
Funded status:
Funded status of plan (7.3) (5.4) (4.8) (5.7)
Unrecognized net (gain) loss (10.6) (3.6) 5.4 6.7
Unrecognized prior
service cost -- -- .3 .3
Unrecognized transitional asset (.6) (.6) -- --
- --------------------------------------------------------------------------------
Net amount recognized $(18.5) $ (9.6) $ .9 $ 1.3
- --------------------------------------------------------------------------------
Amounts recognized:
Prepaid benefit cost $ -- $ -- $ 3.8 $ 3.9
Accrued benefit liability (18.5) (9.6) (2.9) (2.6)
- --------------------------------------------------------------------------------
Net amount recognized $(18.5) $ (9.6) $ .9 $ 1.3
- --------------------------------------------------------------------------------
40
43
The components of the net periodic benefit cost for all plans are as
follows:
1999 1998 1997
- --------------------------------------------------------------------------------
Service cost $ 5.6 $ 4.2 $ 3.5
Interest cost 5.1 4.3 4.0
Expected return on assets (5.0) (4.8) (8.8)
Amortization of:
unrecognized loss .1 -- 4.4
unrecognized transition asset (.2) (.2) (.2)
Special termination benefits 8.0 -- --
- --------------------------------------------------------------------------------
Total benefit cost $ 13.6 $ 3.5 $ 2.9
- --------------------------------------------------------------------------------
The weighted-average assumptions used in the measurement of the benefit
obligation are as follows:
U.S. Plans Non-U.S. Plans
- --------------------------------------------------------------------------------
1999 1998 1999 1998
- --------------------------------------------------------------------------------
Discount rate 7.5% 6.8% 5.5% 5.5%
Expected return on assets 8.5% 8.5% 6.8% 6.8%
Rate of compensation increase 6.0% 6.0% 4.2% 4.2%
- --------------------------------------------------------------------------------
Projected salary levels utilized in the determination of the projected
benefit obligation for the pension plans are based upon historical experience.
The unrecognized transitional asset is being amortized over the estimated
remaining service lives of the employees. Plan assets are primarily comprised of
common stocks and U.S. government and agency securities.
In April 1999, the Company amended a U.S. plan to allow for special
termination benefits related to senior executives. This amendment resulted in a
one-time expense of $8.0 in 1999.
Effective February 29, 2000, the Company will freeze all benefits in each
of the U.S. retirement plans. In connection with this change, a voluntary early
retirement package and certain other benefits were offered to eligible
employees. The net gain or loss associated with this plan freeze and voluntary
early retirement offering have not yet been determined but are not expected to
have a material impact on the Consolidated Financial Statements.
Retiree health care plan The Company provides medical and dental benefits to
eligible retired employees in the United States. The reconciliation of the
changes in the plan's benefit obligation and the statement of the funded status
of the plan are as follows.
Due to the nature of the plan, there are no plan assets.
1999 1998
- --------------------------------------------------------------------------------
Change in benefit obligation:
Benefit obligation, beginning of year $28.8 $23.7
Service cost 2.4 1.9
Interest cost 1.9 1.7
Actuarial (gain) loss (6.2) 1.7
Benefits paid (.3) (.2)
- --------------------------------------------------------------------------------
Benefit obligation, end of year 26.6 28.8
Unrecognized net gain (loss) 6.1 (.2)
- --------------------------------------------------------------------------------
Accrued liability recognized $32.7 $28.6
- --------------------------------------------------------------------------------
The components of net periodic benefit cost for this plan are as follows:
1999 1998 1997
- --------------------------------------------------------------------------------
Service cost $2.4 $1.9 $1.5
Interest cost 1.9 1.7 1.5
- --------------------------------------------------------------------------------
Total benefit cost $4.3 $3.6 $3.0
- --------------------------------------------------------------------------------
The discount rate used in the measurement of the benefit obligation was
7.5% in 1999 and 6.8% in 1998.
The health care cost trend rate was assumed to be 7.0% for 1999 and
decreases gradually to 6.0% for the years 2001 and beyond. Assumed health care
cost trend rates have a significant effect on the amounts reported. A
one-percentage point change in the assumed health care cost trend rate would
have the following effects:
1% 1%
increase decrease
- --------------------------------------------------------------------------------
Effect on total of service and interest
cost components $1.1 $ (.9)
Effect on postretirement benefit obligation 5.7 (4.6)
- --------------------------------------------------------------------------------
41
44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in millions, except share data)
Effective February 29, 2000, the Company will no longer provide medical and
dental benefits to newly retired employees who, as of January 1, 2000, are under
the age of 45 or have less than five years of service. The net gain associated
with this plan curtailment has not yet been determined but it is not expected to
have a material impact on the Consolidated Financial Statements.
Defined contribution plans The Company has defined contribution plans covering
substantially all permanent U.S. employees. Under the plans, employees may elect
to contribute a portion of their salary to the plans. The Company, at its
discretion, may match a portion of the employees' contributions. In 1999, 1998
and 1997, the Company elected to match a portion of employees' contributions if
a targeted earnings level was reached in the U.S. The total expense was $.4, $.4
and $.3 for 1999, 1998 and 1997, respectively.
Effective January 1, 2000, the Company has amended its defined contribution
plans to include a mandatory matching contribution. In addition, profit sharing
contributions will be made if a targeted earnings level is reached in the U.S.
The impact of these changes is not expected to have a material impact on the
U.S. results or the Consolidated Financial Statements.
(9) Leases The Company leases property and equipment primarily under operating
leases. Renewal options exist for substantially all leases.
Future minimum payments, by year and in the aggregate, under noncancelable
operating leases with initial or remaining terms of one year or more consist of
the following at December 31, 1999:
Year
- --------------------------------------------------------------------------------
2000 $ 53.3
2001 43.6
2002 33.9
2003 24.3
2004 14.8
Thereafter 57.9
- --------------------------------------------------------------------------------
Total minimum lease payments $227.8
- --------------------------------------------------------------------------------
Rental expense for all operating leases was $108.5, $91.8 and $72.2 for the
years ended December 31, 1999, 1998 and 1997, respectively.
(10) Interest and Other Expense Interest and other expense consists of the
following:
1999 1998 1997
- --------------------------------------------------------------------------------
Interest expense $17.3 $19.2 $11.1
Interest income (8.0) (8.4) (8.1)
Foreign exchange losses 1.9 2.4 1.3
Loss on sale of
accounts receivable 9.8 .7 --
Miscellaneous, net 3.8 2.7 1.9
- --------------------------------------------------------------------------------
Interest and other expense $24.8 $16.6 $ 6.2
- --------------------------------------------------------------------------------
(11) Acquisitions of Businesses From time to time, the Company acquires certain
franchises and unrelated companies throughout the world. In addition, in 1998,
the Company made a final payment related to the 1996 acquisition of A Teamwork
Sverige AB, in Sweden. The total consideration for these acquisitions was $18.8,
$32.5 and $17.6 in 1999, 1998 and 1997, respectively, the majority of which was
recorded as intangible assets.
Subsequent to December 31, 1999, the Company acquired Elan Group Limited
("Elan"), a European specialty IT staffing company with significant operations
in the U.K. and several other companies throughout the world. The total payments
for these acquisitions was $121.7, the majority of which was recorded as
intangible assets. In addition, the Elan acquisition includes approximately
$44.0 in deferred consideration expected to be paid during 2000 and 2001.
(12) Contingencies The Company is involved in a number
of lawsuits arising in the ordinary course of business which will not, in the
opinion of management, have a material effect on the Company's results of
operations, financial position or cash flows.
42
45
NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)
(IN MILLIONS, EXCEPT SHARE DATA)
(13) Business Segment Data by Geographical Area
The Company is organized and managed on a geographical basis. Each country has
its own distinct operations, is managed locally by its own management team, and
maintains its own financial reports. Under SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," the Company has four
reportable segments--the United States, France, the United Kingdom and Other
Europe. All remaining countries have never met the quantitative thresholds for
determining reportable segments.
Each segment derives at least 97% of its revenues from the placement of
temporary help. The remaining revenues are derived from other employment
services, including contract services and training and testing of temporary and
permanent workers. Segment revenues represent sales to external customers within
a single country. Due to the nature of its business, the Company does not have
export or intersegment sales. The Company provides employment services to a wide
variety of customers, none of which individually comprise a significant portion
of revenues within a reporting segment, geographic region or for the Company as
a whole.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based on Operating Unit Profit, which is equal to segment revenues
less direct costs and branch and national head office operating costs. This
profit measure does not include nonrecurring losses, goodwill amortization,
interest and other income and expense amounts or income taxes. Total assets for
the segments are reported after the elimination of Investments in subsidiaries
and Intercompany accounts.
1999 1998 1997
- --------------------------------------------------------------------------------
Revenues from services:
United States(a) $2,250.5 $2,152.8 $1,993.7
Foreign:
France 3,775.1 3,639.5 2,716.7
United Kingdom 1,170.3 1,088.2 989.1
Other Europe 1,517.2 1,152.6 855.4
Other Countries 1,057.0 781.2 703.6
- --------------------------------------------------------------------------------
Total foreign 7,519.6 6,661.5 5,264.8
- --------------------------------------------------------------------------------
$9,770.1 $8,814.3 $7,258.5
- --------------------------------------------------------------------------------
Operating Unit Profit:
United States $ 80.3 $ 78.0 $ 92.6
France 100.9 77.0 91.2
United Kingdom 40.2 42.3 39.8
Other Europe 63.2 49.2 38.8
Other Countries 16.6 20.9 30.8
- --------------------------------------------------------------------------------
301.2 267.4 293.2
Nonrecurring expenses(b) 28.0 -- --
Write-down of capitalized
software(c) -- 92.1 --
Corporate expenses 35.7 39.5 33.4
Amortization of intangible
assets 6.9 5.4 4.4
Interest and other expense 24.8 16.6 6.2
- --------------------------------------------------------------------------------
Earnings before income taxes $ 205.8 $ 113.8 $ 249.2
- --------------------------------------------------------------------------------
(a) Total systemwide sales in the United States, which includes sales of
Company-owned branches and franchises, were $3,758.7, $3,577.2 and $3,340.2 for
the years ended December 31, 1999, 1998 and 1997, respectively.
(b) Represents nonrecurring items ($16.4 after tax) in the second quarter of
1999 related to employee severances, retirement costs and other associated
realignment costs.
(c) The write-down of capitalized software relates to the abandonment of an
information system that was being developed in the U.S. (See Note 5 to the
Consolidated Financial Statements for further information.)
43
46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions, except share data)
1999 1998 1997
- ------------------------------------------------------
Depreciation and
amortization expense:
United States $ 16.4 $ 14.4 $ 10.9
France 12.2 12.5 10.0
United Kingdom 8.2 8.1 6.8
Other Europe 12.1 9.0 5.9
Other Countries 6.3 4.3 2.8
- ------------------------------------------------------
$ 55.2 $ 48.3 $ 36.4
- ------------------------------------------------------
Earnings from investments
in licensees:
United States $ .1 $ .2 $ .3
Other Europe 2.0 1.4 2.0
Other Countries .9 .9 .6
- ------------------------------------------------------
$ 3.0 $ 2.5 $ 2.9
- ------------------------------------------------------
Total assets:
United States $ 364.4 $ 285.8 $ 431.9
France 1,140.0 1,128.3 871.3
United Kingdom 269.9 230.2 201.9
Other Europe 566.3 427.6 307.3
Other Countries 293.9 253.3 190.2
Corporate (b) 84.2 66.5 44.4
- ------------------------------------------------------
$2,718.7 $2,391.7 $2,047.0
- ------------------------------------------------------
1999 1998 1997
- -----------------------------------------------------------
Investments in licensees:
United States $ .9 $ .5 $ .3
Other Europe 34.0 31.5 30.1
Other Countries 2.1 1.1 2.4
- -----------------------------------------------------------
$ 37.0 $ 33.1 $ 32.8
- -----------------------------------------------------------
Long-lived assets:
United States (a) $ 44.2 $ 48.0 $ 82.3
Foreign:
France 51.4 66.3 42.0
United Kingdom 26.2 30.2 28.1
Other Europe 42.3 34.3 19.1
Other Countries 25.3 19.3 14.7
- -----------------------------------------------------------
Total foreign 145.2 150.1 103.9
- -----------------------------------------------------------
Corporate (b) 2.1 3.9 2.8
- -----------------------------------------------------------
$191.5 $202.0 $189.0
- -----------------------------------------------------------
Additions to long-lived assets:
United States $ 16.7 $ 64.0 $ 48.8
France 16.9 33.4 17.7
United Kingdom 4.9 10.0 11.3
Other Europe 25.2 24.1 14.7
Other Countries 12.2 9.4 8.5
Corporate (b) 1.0 .9 3.2
- -----------------------------------------------------------
$ 76.9 $141.8 $104.2
- -----------------------------------------------------------
(a) Long-lived assets reflect the write-down of capitalized software related to
the abandonment of an information system that was being developed in the U.S.
(See Note 5 to the Consolidated Financial Statements for further information.)
(b) Corporate assets include assets that are not used in the operations of any
geographical segment.
44
47
QUARTERLY DATA (UNAUDITED)
(in millions, except per share data)
First Second Third Fourth
Year Ended December 31, 1999 Quarter Quarter Quarter Quarter Total
- ---------------------------------------------------------------------------------------------------------------------------
Revenues from services $2,175.2 $2,327.6 $2,606.8 $2,660.5 $9,770.1
Gross profit 380.2 404.7 451.8 468.2 1,704.9
Net earnings 20.6 31.8 48.9 48.7 150.0
Net earnings per share $ .26 $ .41 $ .64 $ .64 $ 1.94
Net earnings per share-diluted $ .26 $ .40 $ .63 $ .63 $ 1.91
Dividends per share $ - $ .10 $ - $ .10 $ .20
Market price-
High $ 28 $ 25 9/16 $ 29 15/16 $ 38 11/16
Low 22 1/4 21 21 3/16 28 7/16
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
Revenues from services $1,872.9 $2,136.1 $2,377.8 $2,427.5 $8,814.3
Gross profit 327.4 360.4 398.1 417.1 1,503.0
Net earnings (loss) 21.7 26.2 42.9 (15.1) 75.7
Net earnings (loss) per share $ .27 $ .32 $ .54 $ (.19) $ .94
Net earnings (loss) per share-diluted $ .26 $ .32 $ .53 $ (.19) $ .93
Dividends per share $ - $ .09 $ - $ .10 $ .19
Market price-
High $ 42 9/16 $ 44 7/8 $ 30 1/8 $ 27 7/16
Low 33 5/8 27 11/16 20 19 3/8
- ---------------------------------------------------------------------------------------------------------------------------
The Company's common stock is listed for trading on the New York Stock Exchange,
which is the principal exchange for trading in the Company's shares.
45
48
SELECTED FINANCIAL DATA
(in millions, except per share data)
Year Ended December 31 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
Operations Data:
Revenues from services $9,770.1 $8,814.3 $7,258.5 $6,079.9 $5,484.2
Gross profit 1,704.9 1,503.0 1,310.2 1,148.0 1,000.8
Write-down of capitalized software - (92.1) - - -
Operating profit 230.6 130.4 255.4 227.0 211.7
Net earnings 150.0 75.7 163.9 162.3 128.0
- ------------------------------------------------------------------------------------------------------------
Per Share Data:
Net earnings $ 1.94 $ .94 $ 2.01 $ 1.98 $ 1.68
Net earnings-diluted 1.91 .93 1.97 1.94 1.59
Dividends .20 .19 .17 .15 .13
- ------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
Total assets $2,718.7 $2,391.7 $2,047.0 $1,752.3 $1,517.8
Long-term debt 357.5 154.6 189.8 100.8 61.8
- ------------------------------------------------------------------------------------------------------------
The Notes to Consolidated Financial Statements should be read in conjunction
with the above summary, specifically Note 5 which discusses the write-down of
capitalized software.
46
49
Corporate Information
International Headquarters DIRECTORS EXECUTIVE OFFICERS
P.O. Box 2053 John R. Walter, Chairman Jeffrey A. Joerres
5301 North Ironwood Road Retired President and COO of President & Chief Executive Officer
Milwaukee, WI 53201 USA AT&T Corp. and Chairman
414-961-1000 of Ashlin Management Corp. Terry A. Hueneke
www.manpower.com Executive Vice President
Jeffrey A. Joerres The Americas, Japan, Australia
TRANSFER AGENT AND REGISTRAR President & Chief Executive Officer and the Far East
Manpower Inc.
ChaseMellon Shareholder Michael J. Van Handel
Services, L.L.C. Dudley J. Godfrey, Jr. Senior Vice President,
New York, NY Senior Partner Chief Financial Officer and Secretary
www.chasemellon.com Godfrey & Kahn, S.C.
Stock Exchange Listing
NYSE Symbol: MAN Marvin B. Goodman SENIOR MANAGEMENT
Retired principal shareholder and
10-K REPORT officer of Manpower Services Michael Grunelius
(Toronto) Limited, a Company franchise Managing Director
A copy of form 10-K filed with France & Region
the Securities and Exchange J. Ira Harris
Commission for the year ended Chairman of J.I. Harris & Associates Yoav Michaely
December 31, 1999 is available and Vice Chairman of The Pritzker Senior Vice President
without charge after March 31, 2000 Organization, L.L.C. Other Europe, Middle East
by writing to: and Africa
Michael J. Van Handel Newton N. Minow
Manpower Inc. Counsel and former partner of Dominique Turcq
P.O. Box 2053 Sidley & Austin Senior Vice President
5301 North Ironwood Road Strategic Planning
Milwaukee, WI 53201 USA Gilbert Palay
Retired Senior Executive
ANNUAL MEETING OF SHAREHOLDERS Vice President, Manpower Inc.
April 17, 2000
10:00 a.m. Dennis Stevenson
Marcus Center for the Performing Arts Chairman of AerFi Group,
929 North Water Street Halifax plc and Pearson plc
Milwaukee, WI 53202 USA
Terry A. Hueneke
Executive Vice President
Manpower Inc.
47
50
Principal Operating Units
Argentina Finland Korea Puerto Rico
Australia France Luxembourg Russia
Austria Germany Malaysia Singapore
Belgium Greece Mexico South Africa
Bolivia Guatemala Monaco Spain
Brazil Hong Kong Morocco Sweden
Canada Honduras Netherlands Switzerland
Chile Hungary New Zealand Taiwan
Colombia India Norway Thailand
Costa Rica Ireland Panama United Kingdom
Czech Republic Israel Paraguay United States
Denmark Italy Peru Uruguay
Ecuador Japan Portugal Venezuela
48
Design: Edelman Worldwide Photography: Kevin Anderson Printing: Active
Graphics
51
[MANPOWER LOGO]
International Headquarters P.O. Box 2053, 5301 North Ironwood Road, Milwaukee,
Wisconsin 53201 USA
Telephone 414-961-1000 www.manpower.com
AR-100 (3100)(c) 2000 Manpower Inc.