-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R09VTbIC4BaSxKvFH2yBCTPtAnUDUYPq7zz5AdD8mLIixndod9CshjAdfvgA9AHt avF+ybx04AlW/m9i3XcJQw== 0000892712-96-000043.txt : 19960816 0000892712-96-000043.hdr.sgml : 19960816 ACCESSION NUMBER: 0000892712-96-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANPOWER INC /WI/ CENTRAL INDEX KEY: 0000871763 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 391672779 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10686 FILM NUMBER: 96614002 BUSINESS ADDRESS: STREET 1: 5301 N IRONWOOD RD CITY: MILWAUKEE STATE: WI ZIP: 53217 BUSINESS PHONE: 4149611000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended: June 30, 1996 or [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from: ______to______ Commission file number: 1-10686 MANPOWER INC. (Exact name of registrant as specified in its charter) Wisconsin 39-1672779 (State or other jurisdiction (IRS Employer of incorporation) Identification No.) 5301 N. Ironwood Road Milwaukee, Wisconsin 53217 (Address of principal executive offices) (Zip Code) Registrant's telephone number, Including area code: (414) 961-1000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Shares Outstanding Class at June 30, 1996 - ------------ ---------------- Common Stock, 82,001,153 $.01 par value MANPOWER INC. AND SUBSIDIARIES INDEX Page Number PART I - FINANCIAL INFORMATION Item 1 - Financial Statements (unaudited) - Consolidated Balance Sheets . . . . . . . . 3-4 - Consolidated Statements of Operations . . . 5 - Consolidated Statements of Cash Flows . . . 6 - Notes to Consolidated Financial Statements . 7-8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . 8-10 PART II - OTHER INFORMATION AND SIGNATURES Item 4 - Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . 10 Item 5 - Other Information . . . . . . . . . . . . . . . . 10 Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . 10 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PART I - FINANCIAL INFORMATION Item 1 - Financial Statements MANPOWER INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (in thousands) ASSETS June 30, Dec. 31, 1996 1995 CURRENT ASSETS: Cash and cash equivalents . . . . . . . . . . . $ 97,386 $ 142,773 Accounts receivable, less allowance for doubtful accounts of $33,537 and $32,901, respectively . . . . . . . . . . . 1,099,714 1,043,694 Prepaid expenses and other assets . . . . . . . 45,325 39,224 Future income tax benefits . . . . . . . . . . 45,467 51,617 --------- --------- Total current assets . . . . . . . . . . . . 1,287,892 1,277,308 OTHER ASSETS: Investments in licensees . . . . . . . . . . 31,551 31,591 Other assets . . . . . . . . . . . . . . . . . 141,600 100,868 ------- ------- Total other assets . . . . . . . . . . . . . . 173,151 132,459 PROPERTY AND EQUIPMENT: Land, buildings, leasehold improvements and equipment . . . . . . . . . . . . . . 281,364 267,526 Less: accumulated depreciation and amortization 169,787 159,507 Net property and equipment . . . . . . . . . . 111,577 108,019 ---------- ----------- Total assets . . . . . . . . . . . . . . . . $1,572,620 $1,517,786 The accompanying notes to consolidated financial statements are an integral part of these balance sheets. MANPOWER INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (in thousands, except share data) LIABILITIES AND STOCKHOLDERS' EQUITY June 30, Dec. 31, 1996 1995 CURRENT LIABILITIES: Payable to banks . . . . . . . . . . . $ 28,417 $ 37,559 Accounts payable . . . . . . . . . . . 219,717 219,794 Employee compensation payable . . . . . 49,261 56,630 Accrued liabilities . . . . . . . . . . 85,797 72,325 Accrued payroll taxes and insurance . . 212,343 195,376 Value added taxes payable . . . . . . . 157,764 167,937 Income taxes payable . . . . . . . . . 19,452 25,286 Current maturities of long-term debt . 3,143 1,408 ------- -------- Total current liabilities . . . . . . 775,894 776,315 OTHER LIABILITIES: Long-term debt . . . . . . . . . . . . 80,814 61,783 Other long-term liabilities . . . . . . 210,151 224,695 ------- ------- Total other liabilities . . . . . . . 290,965 286,478 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, authorized 25,000,000 shares, none issued . . . . . . . . . . . . . -- -- Common stock, $.01 par value, authorized 125,000,000 shares, issued 82,001,153 and 81,153,023 shares, respectively . . . . . . . . . 820 812 Capital in excess of par value . . . . . 1,574,370 1,564,305 Accumulated deficit . . . . . . . . . . . (1,092,161) (1,148,223) Cumulative translation adjustments . . . 22,732 38,099 --------- --------- Total stockholders' equity . . . . . . . 505,761 454,993 Total liabilities and stockholders' equity $ 1,572,620 $ 1,517,786 The accompanying notes to consolidated financial statements are an integral part of these balance sheets. MANPOWER INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (in thousands, except per share data) 3 Months Ended 6 Months Ended June 30, June 30, 1996 1995 1996 1995 REVENUES FROM SERVICES . . . . . $1,460,624 $1,371,130 $2,769,791 $2,570,731 COST AND EXPENSES Cost of services . . . . 1,191,364 1,125,409 2,255,892 2,108,686 Selling and administrative expenses . 218,612 196,323 427,773 380,614 Interest and other (income) expenses, net . (8,773) 3,562 (8,984) 6,024 Earnings before income taxes . . . . . . . 59,421 45,836 95,110 75,407 PROVISION FOR INCOME TAXES 20,819 17,588 33,313 28,974 Net earnings . . . . $ 38,602 $ 28,248 $ 61,797 $ 46,433 Net earnings per share $ .46 $ .37 $ .74 $ .61 Dividends declared . . $ .07 $ .06 $ .07 $ .06 Weighted average common shares 83,144 76,340 82,976 76,121 The accompanying notes to consolidated financial statements are an integral part of these statements. MANPOWER INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (in thousands) 6 Months Ended June 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings . . . . . . . . . . . . . . . $ 61,797 $ 46,433 Adjustments to reconcile net earnings to net cash provided by operating activities: Amortization of intangible assets . . . . . 1,555 2,110 Depreciation . . . . . . . . . . . . . . . 15,378 12,662 Deferred income taxes . . . . . . . . . . . 6,150 (5,300) Provision for doubtful accounts . . . . . . 5,862 6,513 Changes in operating assets and liabilities: Accounts receivable . . . . . . . . . . . . (94,743) (110,487) Other assets . . . . . . . . . . . . . . . (19,432) 1,309 Other liabilities . . . . . . . . . . . . . 28,851 32,157 Cash used in operating activities . . . . . 5,418 (14,603) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of businesses . . . . . . . . . (31,206) -- Purchases of property and equipment . . . (22,319) (15,712) Proceeds from the sale of property and equipment 933 1,018 Cash used in investing activities . . . . (52,592) (14,694) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in payable to banks . . . . . . (7,519) 13,697 Proceeds from long-term debt . . . . . . . 21,614 -- Repayment of long-term debt . . . . . . . (789) (8,425) Dividends paid . . . . . . . . . . . . . . (5,735) (4,507) Cash provided by financing activities . . 7,571 765 Effect of exchange rate changes on cash . (5,784) 2,890 Net change in cash and cash equivalents . . (45,387) (25,642) Cash and cash equivalents, beginning of period 142,773 82,049 Cash and cash equivalents, end of period . $ 97,386 $ 56,407 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid . . . . . . . . . . . . . . $ 5,507 $ 6,860 Income taxes paid . . . . . . . . . . . . $ 34,715 $ 42,294 The accompanying notes to consolidated financial statements are an integral part of these statements. MANPOWER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) For the Six Months Ended June 30, 1996 and 1995 (1)Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or ommitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company's latest annual report on Form 10-K for the year ended December 31, 1995. (2)Accounting Policies 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, ranging from five to twenty years. (3)Operational Results The information furnished reflects all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods presented. Such adjustments are of a normal recurring nature. (4)Income Taxes The provision for income taxes has been computed using the estimated annual effective tax rate, based on currently available information. (5)Unsecured Revolving Credit Agreement On April 1, 1996, the Company entered into a $275 million unsecured revolving credit agreement which includes a $60 million commitment to be used exclusively for standby letters of credit. As of June 30, 1996, $17.5 million of Yen denominated borrowings is outstanding under this multicurrency facility. The interest rate and facility fee payable on the total line vary based upon the Company's financial performance, debt rating, and borrowing level, and are currently at LIBOR plus .225% and .125%, respectively. The facility matures on May 15, 1999, but may be extended for an additional two years with the lenders' consent. The agreement requires, among other things, that the Company comply with minimum tangible net worth levels and interest coverage and debt-to- capitalization ratios. This agreement replaced the Company's $240 million unsecured revolving credit agreement. (6)Dividend On April 29, 1996, the Company's Board of Directors declared a cash dividend of $.07 per share which was paid on June 14, 1996 to shareholders of record on May 24, 1996. (7)Interest and Other Expenses In April, the Company recorded an $8.5 million gain on proceeds received from an equity interest and note related to the sale of Blue Arrow Personnel Services Limited in 1991. The Company had previously deferred recognition of the equity interest and the note due to uncertainties regarding their eventual realization. (8)Acquisitions of Businesses During the first six months of 1996, the Company acquired Teamwork Sverige AB, the largest employment services organization in Sweden, and several United States franchises. The consolidated financial statements include the operating results of each business from the date of acquisition. Pro forma results of operations have not been presented because the effects of these acquisitions were not significant. The total consideration for these acquisitions was $37.7 million. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Results - Three Months Ended June 30, 1996 and 1995 Second quarter 1996 revenues increased 6.5% to $1,460.6 million. Revenues were negatively impacted 4.5% due to changes in currency exchange rates between years. Volume, as measured by billable hours of branch operations, increased 8.0% in the quarter. All of the Company's major markets experienced revenue increases, including the United States (14.3%), Manpower-United Kingdom (7.7% in Pound Sterling), and France (1.7% in French Francs). The low revenue growth rate in France was expected after the record revenue levels of 1995 and the economic slowdown in France which started in late 1995, and represents an improvement over the first quarter 1996 results. Cost of services, which consists of payroll and related expenses of temporary workers, decreased as a percentage of revenues to 81.6% in 1996 from 82.1% in 1995. This decrease is primarily attributable to a decrease in payroll tax and insurance costs in certain of the Company's major markets. Selling and administrative expenses increased as a percentage of revenue to 15.0% in 1996 from 14.2% in 1995. This increase is primarily due to the decrease in revenues in France without a proportional decrease in expenses. Excluding the impact of changes in foreign currency, selling and administrative expenses increased 16.7% for the quarter. Net interest and other totaled $8.8 million of income in the second quarter of 1996 compared to $3.6 million of expense in the second quarter of 1995. During the second quarter of 1996, the Company recorded an $8.5 million gain on proceeds received from an equity interest and note related to the sale of Blue Arrow Personnel Services Limited in 1991. The Company had previously deferred recognition of the equity interest and the note due to uncertainties regarding their eventual realization. The remaining change in net interest and other income/expenses is primarily due to an increase in interest income, $2.0 million in the second quarter of 1996 compared to $1.3 million in the second quarter of 1995, and a reduction in interest expense, $1.5 million in the second quarter of 1996 compared to $3.5 million in 1995. The decrease in interest expense is due to lower worldwide borrowing levels as the Company converted its subordinated convertible debentures in October of 1995. The Company provided income taxes at an estimated rate of 35% which is equal to the expected annual effective rate for 1996. The Company's effective income tax rate for 1995 was 38.5%. Operating Results - Six Months Ended June 30, 1996 and 1995 Revenues for the first six months of 1996 increased 7.7% to $2,769.8 million. Volume, as measured by billable hours of branch operations, increased 6.9% for the six month period. Major markets experiencing revenue increases included the United States (12.4%) and Manpower-United Kingdom (12.0% in Pound Sterling). France experienced a slight decrease in revenues (0.6% in French Francs) which was expected after the record revenue levels of 1995 and the economic slowdown in France which started in late 1995. Cost of services, which consists of payroll and related expenses of temporary workers, decreased as a percentage of revenues to 81.4% in 1996 from 82.0% in 1995. This decrease is primarily attributable to a decrease in payroll tax and insurance costs in certain of the Company's major markets. Selling and administrative expenses increased as a percentage of revenues to 15.4% in 1996 from 14.8% in 1995. This increase is primarily due to the decrease in revenues in France without a proportional decrease in expenses. Excluding the impact of changes in foreign currency, selling and administrative expenses increased 15.1% for the six month period. Net interest and other totaled $9.0 million of income in the first six months of 1996 compared to $6.0 million of expense in the first six months of 1995. As discussed above, the Company recorded an $8.5 million gain in the second quarter of 1996. The remaining change is primarily due to an increase in interest income, which was $4.1 million in the first six months of 1996 compared to $2.6 million in the first six months of 1995, and a reduction in interest expense, $3.2 million in the first six months of 1996 compared to $6.7 million in 1995. The decrease in interest expense is due to lower worldwide borrowing levels as the Company converted its subordinated convertible debentures in October of 1995. The Company provided income taxes at an estimated rate of 35% which is equal to the expected annual effective rate of 1996. The Company's effective income tax rate for 1995 was 38.5%. Liquidity and Capital Resources Cash provided by operating activities was $5.4 million in the first six months of 1996 compared to cash used in operating activities of $14.6 million in the first six months of 1995. The change reflects the higher earnings level in 1996 offset by a larger increase in working capital requirements in the first six months of 1996 compared to the first six months of 1995. Cash provided by operating activities before working capital changes was $90.7 million in the first six months of 1996 compared to $62.4 million in 1995. During the first six months of 1996, the Company acquired Teamwork Sverige AB, the largest employment services organization in Sweden, and several United States franchises. The total cash consideration paid for these acquisitions was $31.2 million. The Company increased its capital expenditures to $22.3 million in the first six months of 1996 from $15.7 million during the first six months of 1995. These expenditures primarily consist of computer equipment and office furniture used in the branch office network. During the first six months of 1996, the Company had net additional borrowings of $13.3 million compared to $5.3 million in the first six months of 1995. The additional borrowings were primarily used to support working capital growth. Accounts receivable increased $56.0 million to $1,099.7 million at June 30, 1996 from $1,043.7 million at December 31, 1995. The change represents a $32.4 million decrease due to the change in foreign exchange rates offset by a general increase in receivables due to the increased sales levels in the Company's major markets. The Company continues to carry reserves related to the strategic restructuring plan started in 1989. No changes have been made to the reserve estimates during the first six months of 1996. On April 1, 1996, the Company entered into a $275 million unsecured revolving credit agreement which includes a $60 million commitment to be used exclusively for standby letters of credit. The interest rate and facility fee payable on the total line vary based upon the Company's financial performance, debt rating, and borrowing level, and are currently at LIBOR plus .225% and .125%, respectively. The facility matures on May 15, 1999, but may be extended for an additional two years with the lenders' consent. The agreement requires, among other things, that the Company comply with minimum tangible net worth levels and interest coverage and debt-to-capitalization ratios. This agreement replaced the Company's $240 million unsecured revolving credit agreement. As of June 30, 1996, the Company had borrowings of $17.5 million outstanding under its $275 million U.S. revolving credit facility, and borrowings of $58.6 million outstanding under its U.S. commercial paper program. The commercial paper borrowings have been classified as long-term debt due to the availability to refinance them on a long-term basis under the revolving credit facility. In addition, the Company and some of its foreign subsidiaries maintain separate lines of credit with foreign financial institutions to meet short-term working capital needs. As of June 30, 1996, such lines totaled $167.1 million, of which $138.7 million was unused. On April 29, 1996, the Company's Board of Directors declared a cash dividend of $.07 per share which was paid on June 14, 1996 to shareholders of record on May 24, 1996. PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders On April 29, 1996, at the Company's Annual Meeting of Shareholders (the "Annual Meeting") the shareholders of the Company voted to: (1) elect three directors to serve until 1999 as Class III directors; (2) increase the number of shares authorized under the Manpower 1990 Employee Stock Purchase Plan; and (3) ratify the appointment of Arthur Andersen LLP as the Company's independent auditors for 1996. In addition, Ms. Audrey Freedman and Messrs. Mitchell S. Fromstein and Dennis Stevenson continued as Class I directors (term expiring 1997), and Messrs. J. Ira Harris, Newton N. Minow, and Gilbert Palay continued as Class II directors (term expiring 1998). The results of the proposals voted upon at the Annual Meeting are as follows:
Broker For Against Withheld Abstain Non-Vote 1. a) Election of Jon F. Chait 66,779,698 -- 1,185,765 -- -- b) Election of Dudley J. Godfrey Jr. 66,774,326 -- 1,191,137 -- -- c) Election of Marvin B. Goodman 66,779,292 -- 1,186,171 -- -- 2. Increase the number of shares authorized under the Manpower 1990 Employee Stock Purchase Plan 67,288,819 523,130 -- 153,514 -- 3. Ratification of Arthur Andersen LLP 67,235,602 28,288 -- 28,886 -- as independent auditors.
Item 5 - Other Information On July 1, 1996, Manpower Wisconsin Inc., (formerly Manpower International Inc.), a wholly-owned operating subsidiary of Manpower Inc., merged with and into Manpower Inc. Accordingly, in addition to serving as a holding company for the Company's subsidiaries, the Company now conducts certain United States operations directly. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits - none (b) Reports on Form 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MANPOWER INC. ------------- (Registrant) Date: August 13, 1996 /s/ Michael J. Van Handel ------------------------------- Michael J. Van Handel Vice President Chief Accounting Officer & Treasurer (Signing on behalf of the Registrant and as Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----