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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:
March 31, 1997
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 March 31, 1997
Common Stock, 81,790,895
$.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
- Supplemental Systemwide Information 5
- Consolidated Statements of Cash Flows 6
- Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 9
PART II - OTHER INFORMATION AND SIGNATURES
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
March 31, Dec. 31,
1997 1996
CURRENT ASSETS:
Cash and cash equivalents $ 180,274 $ 180,553
Accounts receivable, less allowance for
doubtful accounts of $34,643 and
$33,526, respectively 1,141,339 1,167,468
Prepaid expenses and other assets 47,236 42,913
Future income tax benefits 48,495 48,151
Total current assets 1,417,344 1,439,085
OTHER ASSETS:
Investments in licensees 30,414 29,409
Other assets 168,070 162,390
Total other assets 198,484 191,799
PROPERTY AND EQUIPMENT:
Land, buildings, leasehold improvements
and equipment 297,731 302,547
Less: accumulated depreciation and
amortization 180,903 181,168
Net property and equipment 116,828 121,379
Total assets $1,732,656 $1,752,263
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
March 31, Dec. 31,
1997 1996
CURRENT LIABILITIES:
Payable to banks $ 17,775 $ 24,375
Accounts payable 239,348 235,466
Employee compensation payable 57,010 60,222
Accrued liabilities 90,552 87,444
Accrued payroll taxes and insurance 183,919 195,194
Value added taxes payable 165,127 174,624
Income taxes payable 31,180 30,945
Current maturities of long-term debt 2,347 2,986
Total current liabilities 787,258 811,256
OTHER LIABILITIES:
Long-term debt 124,170 100,848
Other long-term liabilities 239,460 239,453
Total other liabilities 363,630 340,301
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 82,558,195 and 82,206,446
shares, respectively 826 822
Capital in excess of par value 1,587,053 1,579,868
Accumulated deficit (971,631) (998,230)
Cumulative translation adjustments (10,086) 21,476
Treasury stock at cost, 767,300 and 101,700
shares, respectively (24,394) (3,230)
Total stockholders' equity 581,768 600,706
Total liabilities and stockholders'
equity $ 1,732,656 $ 1,752,263
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
March 31,
1997 1996
Revenues from services $1,521,002$ 1,309,167
Cost of services 1,244,347 1,064,528
Gross profit 276,655 244,639
Selling and administrative
expenses 236,301 209,161
Operating profit 40,354 35,478
Interest and other (income)
expenses, net 666 (211)
Earnings before income taxes 39,688 35,689
Provision for income taxes 13,089 12,494
Net earnings $ 26,599 $ 23,195
Net earnings per share $ .32 $ .28
Weighted average common shares 83,119 82,778
The accompanying notes to consolidated financial
statements are an integral part of these statements.
MANPOWER INC. AND SUBSIDIARIES
Supplemental Systemwide Information (Unaudited)
(in thousands)
3 Months Ended
March 31,
1997 1996
Systemwide Sales $1,850,584 $1,627,101
Systemwide information represents the total of Company-owned branches
and franchises.
MANPOWER INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Months Ended
March 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 26,599 $ 23,195
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 8,840 7,612
Amortization of intangible assets 1,032 636
Deferred income taxes (344) 5,200
Provision for doubtful accounts 2,844 2,839
Changes in operating assets and
liabilities:
Accounts receivable (35,986) 66,584
Other assets (20,638) (11,604)
Other liabilities 29,745 (47,483)
Cash provided by operating activities 12,092 46,979
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (9,408) (9,197)
Proceeds from the sale of property and
equipment 690 347
Cash used in investing activities (8,718) (8,850)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in payable to banks (4,862) (20,450)
Proceeds from long-term debt 23,664 2,361
Repayment of long-term debt (312) (3,517)
Repurchase of common stock (21,164) --
Cash used in financing activities (2,674) (21,606)
Effect of exchange rate changes on cash (979) (2,989)
Net change in cash and cash equivalents (279) 13,534
Cash and cash equivalents, beginning
of period 180,553 142,773
Cash and cash equivalents, end of period $ 180,274 $ 156,307
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 1,741 $ 3,972
Income taxes paid $ 14,785 $ 5,773
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 Three Months Ended March 31, 1997 and 1996
(1)Basis of Presentation
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted 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, 1996.
(2)Accounting Policies
In February of 1997, the Financial Accounting Standards
Board issued SFAS No. 128, "Earnings per Share." This
Statement revises the computation and presentation of
earnings per share and will be adopted by the Company
in the fourth quarter of 1997. The Company does not
expect this Statement to have a significant impact on
reported earnings per share. Had the Company adopted
this Statement for the three months ended March 31,
1997 and 1996, both basic and diluted earnings per
share would have been equal to those currently reported
on the Statements of Operations.
(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)Subsequent Events
On April 28, 1997, the Company's Board of Directors
declared a cash dividend of $.08 per share payable June
16, 1997 to shareholders of record on May 28, 1997.
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Operating Results - Three Months Ended March 31, 1997
and 1996
First quarter 1997 revenues increased 16.2% to $1,521.0
million. Revenues were unfavorably impacted 5.1% in the
first quarter by currency exchange rates. Volume, as
measured by billable hours of branch operations,
increased 22.1% in the quarter. All of the Company's
major markets experienced revenue increases, including
the United States (12.2%), France (25.5% in French
Francs) and the United Kingdom (9.2% in Pound
Sterling).
Cost of services, which consists of payroll and related
expenses of temporary workers, increased as a
percentage of revenues to 81.8% in the first quarter of
1997 from 81.3% in the first quarter of 1996. During
1996, government employment incentive programs in
certain of the Company's European markets reduced
payroll taxes, resulting in the lower cost of services.
Without the impact of these programs, cost of services
as a percentage of revenues in 1996 is comparable to
the 1997 amount.
Selling and administrative expenses increased 13.0%,
but decreased as a percentage of revenue to 15.5% in
1997 from 16.0% in 1996. This decrease reflects the
improved leveraging of overhead costs with volume
growth, primarily in France.
Net interest and other was $666,000 of expense in the
first quarter of 1997 compared to income of $211,000 in
the first quarter of 1996. This change is primarily due
to the changes in net interest and translation losses.
Net interest was income of $144,000 in the first
quarter of 1997 compared to income of $622,000 in the
first quarter of 1996. This change in net interest
income is primarily the result of an increase in
interest expense caused by higher worldwide borrowing
levels. The Company had a translation loss of $504,000
during the first quarter of 1997 due to the fluctuation
in foreign currency exchange rates, compared to a loss
of $161,000 in the first quarter of 1996.
The Company provided income taxes at an estimated rate
of 33.0% which is equal to the expected annual
effective rate for 1997. The Company's effective
income tax rate for 1996 was 33.0%.
Liquidity and Capital Resources
Cash provided by operating activities was $12.1 million
in the first quarter of 1997 compared to $47.0 million
in the first quarter of 1996. This change reflects the
increase in working capital requirements in the first
quarter of 1997 compared to a decrease in the first
quarter of 1996. Cash provided by operating activities
before the change in working capital requirements was
$39.0 million in the first quarter of 1997 compared to
$39.5 million in 1996.
Capital expenditures increased to $9.4 million in the
first quarter of 1997 from $9.2 million in the first
quarter of 1996. These expenditures primarily consist
of computer equipment and office furniture used in the
Company's worldwide branch office network.
Net cash from additional borrowings was $18.5 million
in the first quarter of 1997 compared to net cash used
to retire borrowings of $21.6 million in the first
quarter of 1996. The Company repurchased 665,600 shares
of stock during the first quarter of 1997, at a cost of
$21.2 million. These shares were purchased under the
1996 Board of Directors' authorization.
Accounts receivable decreased to $1,141.3 million at
March 31, 1997 from $1,167.5 million at
December 31, 1996. This change is due to the impact of
foreign exchange rates during the quarter, which
reduced receivables by $59.2 million, offset by the
increased sales level in all of the Company's major
markets.
As of March 31, 1997, the Company had borrowings of
$61.4 million outstanding under its $275 million U.S.
revolving credit facility, and borrowings of $58.9
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 March 31, 1997, such
lines totaled
$154.7 million, of which $136.9 million was unused.
On April 28, 1997, the Company's Board of Directors
declared a cash dividend of $.08 per share which will
be paid on June 16, 1997 to shareholders of record on
May 28, 1997.
PART II - OTHER INFORMATION
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(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: May 13, 1997 /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)