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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:
June 30, 1998
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.
Class Shares Outstanding
Common Stock at June 30, 1998
$.01 par value 80,755,067
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 - 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 13
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 13
PART II - OTHER INFORMATION AND SIGNATURES
Item 4 - Submission of Matters to a Vote of
Security Holders 14
Item 5 - Other Information 14
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MANPOWER INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(in thousands)
ASSETS
June 30, Dec. 31,
1998 1997
CURRENT ASSETS:
Cash and cash equivalents $ 155,551 $ 142,246
Accounts receivable, less allowance for 1,651,819 1,437,378
doubtful accounts of $38,467 and
$38,019, respectively
Prepaid expenses and other assets 61,715 60,164
Future income tax benefits 46,890 47,113
Total current assets 1,915,975 1,686,901
OTHER ASSETS:
Investments in licensees 33,773 32,763
Other assets 221,041 190,990
Total other assets 254,814 223,753
PROPERTY AND EQUIPMENT:
Land, buildings, leasehold improvements 363,801 324,770
and equipment
Less: accumulated depreciation and
amortization 207,110 188,394
Net property and equipment 156,691 136,376
Total assets $2,327,480 $2,047,030
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,
1998 1997
CURRENT LIABILITIES:
Payable to banks $ 121,018 $ 69,848
Accounts payable 353,769 271,064
Employee compensation payable 63,403 68,416
Accrued liabilities 122,507 108,615
Accrued payroll taxes and insurance 247,995 248,605
Value added taxes payable 262,419 223,538
Income taxes payable 17,630 13,303
Current maturities of long-term debt 1,326 1,288
Total current liabilities 1,190,067 1,004,677
OTHER LIABILITIES:
Long-term debt 229,356 189,786
Other long-term liabilities 246,281 235,004
Total other liabilities 475,637 424,790
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
authorized 25,000,000 shares, -- --
none issued
Common stock, $.01 par value, authorized 832 828
125,000,000 shares, issued 83,187,467
and 82,778,873 shares, respectively
Capital in excess of par value 1,600,243 1,590,704
Accumulated deficit (807,596) (848,195)
Cumulative translation adjustments (46,617) (40,688)
Treasury stock at cost, 2,432,400 shares (85,086) (85,086)
Total stockholders' equity 661,776 617,563
Total liabilities and stockholders'equity 2,327,480 2,047,030
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,
1998 1997 1998 1997
Revenues from services $2,136,103 $1,792,216 $4,008,969 $3,313,218
Cost of services 1,775,718 1,473,066 3,321,226 2,717,413
Gross profit 360,385 319,150 687,743 595,805
Selling and administrative 315,450 257,028 606,045 493,329
expenses
Operating profit 44,935 62,122 81,698 102,476
Interest and other income (4,352) (1,090) (7,496) (1,756)
(expense)
Earnings before income 40,583 61,032 74,202 100,720
taxes
Provision for income taxes 14,411 20,140 26,340 33,229
Net earnings $ 26,172 $ 40,892 $ 47,862 $ 67,491
Net earnings per share $ .32 $ .50 $ .59 $ .82
Net earnings per share - $ .32 $ .49 $ .58 $ .81
assuming dilution
Weighted average common 80,646 81,802 80,602 81,825
shares
Weighted average common 82,031 83,570 82,012 83,662
shares - assuming dilution
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 6 Months Ended
June 30, June 30,
1998 1997 1998 1997
Systemwide Sales $2,561,343 $2,199,036 $4,838,259 $4,056,596
Systemwide information represents the total of Company-owned
branches and franchises.
MANPOWER INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
6 Months Ended
June 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 47,862 $ 67,491
Adjustments to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation and 26,586 19,990
amortization
Deferred income taxes 223 (2,690)
Provision for doubtful 7,186 6,702
accounts
Changes in operating assets
and liabilities:
Accounts receivable (232,452) (213,439)
Other assets (19,554) (20,689)
Other liabilities 163,934 97,344
Cash used by operating (6,215) (45,291)
activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (63,322) (39,107)
Proceeds from the sale of property and 882 996
equipment
Cash used by investing activities (62,440) (38,111)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in payable to banks 51,560 28,298
Proceeds from long-term debt 40,292 29,074
Repayment of long-term debt (757) (1,711)
Dividends paid (7,263) (6,549)
Repurchase of common stock -- (21,164)
Cash provided by financing activities 83,832 27,948
Effect of exchange rate changes on (1,872) (9,019)
cash
Net change in cash and cash 13,305 (64,473)
equivalents
Cash and cash equivalents, beginning 142,246 180,553
of period
Cash and cash equivalents, end of $ 155,551 $ 116,080
period
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 4,157 $ 4,230
Income taxes paid $ 16,011 $ 46,706
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, 1998 and 1997
(in thousands, except per share data)
(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, 1997.
(2) Accounting Policies
During the first quarter of 1998, the Company adopted
Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income." This
statement establishes standards for the reporting and
display of comprehensive income and its components.
Comprehensive income is the total of net earnings and
all other nonowner changes in stockholders' equity.
Total comprehensive income is as follows:
3 Months Ended 6 Months Ended
June 30, June 30,
1998 1997 1998 1997
Net earnings $ 26,172 $ 40,892 $ 47,862 $ 67,491
Change in cumulative 4,631 (16,366) (5,929) (47,928)
translation adjustments
Total comprehensive income $ 30,803 $ 24,526 $ 41,933 $ 19,563
In March of 1998 the American Institute of Certified
Public Accountants issued Statement of
Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This
statement is effective for the Company beginning in
1999 and is not expected to have a material impact on
the Consolidated Financial Statements.
In June of 1998, the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." 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. This statement is effective for the
Company beginning in 2000, but may be adopted earlier.
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 due to the Company's
limited use of derivative instruments.
(3) Interest Rate Swap
In January of 1998, the Company entered into an
interest rate swap agreement, expiring in 2001, to fix
the interest rate at 6.0% on $50,000 of the Company's
borrowings under the revolving credit agreement. This
swap agreement had an immaterial impact on the recorded
interest expense during the first six months of 1998.
As of June 30, 1998, the variable interest rate under
the revolving credit agreement was 5.9%.
(4) Operational Results
The information furnished reflects all adjustments
that, 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.
(5) Earnings Per Share
During 1997 the Company adopted SFAS No. 128, "Earnings
per Share." As a result, the Company's reported
earnings per share for 1997 have been restated. The
calculation of net earnings per share and net earnings
per share - assuming dilution are as follows:
3 Months Ended 6 Months Ended
June 30, June 30,
1998 1997 1998 1997
Net earnings per share:
Net earnings available to $ 26,172 $ 40,892 $ 47,862 $ 67,491
common shareholders
Weighted average common 80,646 81,802 80,602 81,825
shares outstanding
$ .32 $ .50 $ .59 $ .82
Net earnings per share -
assuming dilution:
Net earnings available to $ 26,172 $ 40,892 $ 47,862 $ 67,491
common shareholders
Weighted average common 80,646 81,802 80,602 81,825
shares outstanding
Effect of dilutive stock 1,385 1,768 1,410 1,837
options
82,031 83,570 82,012 83,662
$ .32 $ .49 $ .58 $ .81
(6) Income Taxes
The Company has provided income taxes for the six month
period ended June 30, 1998 at a rate of 35.5%, which is
equal to the estimated annual effective tax rate based
on the currently available information. This rate is
higher than the effective tax rate for 1997 of 34.2%
due to the increase in the corporate income tax rate in
France in 1997, from 36.6% to 41.6%, and the effect of
net operating loss carryforwards.
(7) Business Segment Data by Geographical Segment
Geographical segment information is as follows:
3 Months Ended 6 Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues from services:
United States (a) $ 538,499 $ 500,406 $1,037,572 $ 947,807
France 900,685 663,411 1,622,074 1,177,797
United Kingdom 254,473 242,369 502,707 473,987
Other Europe 262,207 205,232 493,045 386,183
Other Countries 180,239 180,798 353,571 327,444
$2,136,103 $1,792,216 $4,008,969 $3,313,218
Earnings before income
taxes:
United States $ 20,284 $ 24,585 $ 35,544 $ 41,783
France 18,150 20,244 30,216 31,018
United Kingdom 5,592 8,021 12,985 14,755
Other Europe 7,310 10,896 13,427 16,530
Other Countries 5,458 7,927 12,617 14,776
Other Corporate (11,859) (9,551) (23,091) (16,386)
Expenses
Operating Profit 44,935 62,122 81,698 102,476
Interest & Other (4,352) (1,090) (7,496) (1,756)
Income (Expense)
$ 40,583 $ 61,032 $ 74,202 $ 100,720
(a) Total systemwide sales in the United States,
which include sales of Company-owned branches and
franchises, was $894,951 and $850,392 for the three
months ended June 30, 1998 and 1997, and $1,726,200
and $1,583,265 for the six months ended June 30,
1998 and 1997, respectively.
During 1997, the Financial Accounting Standards Board
issued SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information." This Statement
will be adopted by the Company as of December 31, 1998
and is not expected to significantly change the current
segment reporting.
(8) Dividend
On April 23, 1998, the Company's Board of Directors
declared a cash dividend of $.09 per share which was
paid on June 15, 1998 to shareholders of record on June
3, 1998.
(9) Subsequent Event
Subsequent to June 30, 1998, the Company repurchased
514,600 shares of common stock at a cost of $13.9
million.
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Operating Results - Three Months Ended June 30, 1998
and 1997
Revenues increased 19.2% to $2,136.1 million for the
second quarter of 1998. Revenues were unfavorably
impacted by changes in currency exchange rates during
the quarter due to the strengthening of the U.S. Dollar
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 22.9%. Volume, as measured
by billable hours of branch operations, increased 15.7%
in the quarter. All of the Company's major markets
experienced revenue increases, including the United
States (7.6%), France (41.2% in French Francs) and
Manpower-United Kingdom (3.4% in Pounds Sterling).
Cost of services, which consists of payroll and related
expenses of temporary workers, increased as a
percentage of revenues to 83.1% in the second quarter
of 1998 from 82.2% in the second quarter of 1997. 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 of 1998. This
reduction is the primary reason for the increased cost
of services in 1998.
Selling and administrative expenses increased to 14.8%
of revenues, from 14.3% of revenues in the second
quarter of 1997. This increase is due to significant
investment in new markets, primarily in Europe, and
headquarters costs and infrastructure enhancements in
many of the Company's major markets.
Interest and other expense was $4.4 million in the
second quarter of 1998 compared to $1.1 million in the
second quarter of 1997. This increase is due to a $1.6
million increase in net interest expense and a $1.5
million increase in translation losses. Net interest
expense increased in the quarter as a result of higher
borrowing levels to finance the share repurchase
program in 1997 and the Company's investment in new
markets. The increase in translation losses is due
primarily to losses recognized on the translation of
the net monetary assets of operations in highly
inflationary economies.
The Company provided income taxes at a rate of 35.5%
during the second quarter of 1998, equal to the
estimated annual effective tax rate for 1998. This
rate is slightly higher than the annual effective tax
rate for 1997 due to the increase in the French
corporate income tax rate (see Note 6 to Consolidated
Financial Statements) and the effect of net operating
loss carryforwards.
On a diluted basis, net earnings per share was $.32 in
the second quarter of 1998, compared to $.49 per share
in the second quarter of 1997. The 1998 earnings were
negatively impacted $.02 due to the lower currency
exchange rates in the second quarter of 1998 compared
to the second quarter of 1997 and $.01 per share due to
the increase in the effective tax rate discussed above.
Operating Results - Six Months Ended June 30, 1998 and
1997
Revenues increased 21.0% to $4,009.0 million for the
first six months of 1998. Revenues were unfavorably
impacted by changes in currency exchange rates during
the six months due to the strengthening of the U.S.
Dollar 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 25.9%.
Volume, as measured by billable hours of branch
operations, increased 17.7% in the six month period.
All of the Company's major markets experienced revenue
increases, including the United States (9.5%), France
(46.1% in French Francs) and Manpower-United Kingdom
(5.2% in Pounds Sterling).
Cost of services increased as a percentage of revenues
to 82.8% in the first six months of 1998 from 82.0% in
the first six months of 1997. As mentioned above, the
primary reason for the increased cost of services in
1998 is the reduction of payroll tax credits in France.
Selling and administrative expenses increased to 15.1%
of revenues during the first six months of 1998 from
14.9% of revenues during the first six months of 1997.
This increase is primarily due to significant
investment in new markets, primarily in Europe, and
headquarters costs and infrastructure enhancements in
many of the Company's major markets.
Interest and other expense was $7.5 million in the
first six months of 1998 compared to $1.8 million in
the first six months of 1997. This increase is due to a
$2.6 million increase in net interest expense and a
$2.2 million increase in translation losses. Net
interest expense increased in the period as a result of
higher borrowing levels to finance the share repurchase
program in 1997 and the Company's investment in new
markets. The increase in translation losses is due
primarily to losses recognized on the translation of
the net monetary assets of operations in highly
inflationary economies.
The Company provided income taxes at a rate of 35.5%
during the first six months of 1998, equal to the
estimated annual effective tax rate for 1998. This
rate is slightly higher than the annual effective tax
rate for 1997 due to the increase in the French
corporate income tax rate (see Note 6 to Consolidated
Financial Statements) and the effect of net operating
loss carryforwards.
On a diluted basis, net earnings per share was $.58 in
the first six months of 1998, compared to $.81 per
share in the first six months of 1997. The 1998
earnings were negatively impacted $.06 per share due to
the lower currency exchange rates in the first six
months of 1998 compared to the first six months of 1997
and $.02 per share due to the increase in the effective
tax rate discussed above.
Liquidity and Capital Resources
Cash used by operating activities was $6.2 million in
the first six months of 1998 compared to
$45.3 million in the first six months of 1997. The
decrease in cash used reflects a significant decrease
in working capital requirements between periods, $88.1
million in the first six months of 1998 compared to
$136.8 million in the first six months of 1997, due to
the lower growth rate in the first six months of 1998
compared to the first six months of 1997. Cash provided
by operating activities before the changes in working
capital requirements was $81.9 million in the first six
months of 1998 compared to $91.5 million in the first
six months of 1997, reflecting the lower earnings
levels.
Capital expenditures were $63.3 million in the first
six months of 1998 compared to $39.1 million during the
first six months of 1997. These expenditures include
capitalized software of $18.6 million and $17.2 million
in the first six months of 1998 and 1997, respectively.
The balance is comprised of purchases of computer
equipment, office furniture and other costs related to
office openings and refurbishments.
Net cash provided from additional borrowings was $91.1
million in the first six months of 1998 compared to
$55.7 million in the first six months of 1997. The
additional borrowings in 1998 were primarily used to
support the working capital growth, investment in new
markets and capital expenditures. The additional
borrowings in 1997 were primarily used to support the
working capital growth and the repurchase of the
Company's common stock. The Company repurchased
665,600 shares of common stock during the first six
months of 1997, at a cost of $21.2 million. No shares
were repurchased during the first six months of 1998.
Subsequent to June 30, 1998, the Company repurchased
514,600 shares of common stock at a cost of $13.9
million.
Accounts receivable increased to $1,651.8 million at
June 30, 1998 from $1,437.4 million at December 31,
1997. This increase is primarily due to the growth in
France and many of the Company's major markets. The
change of currency exchange rates during the first six
months of 1998 negatively impacted the receivable
balance by $10.8 million.
As of June 30, 1998, the Company had borrowings of
$168.6 million and letters of credit of $52.0 million
outstanding under its $415 million U.S. revolving
credit facility, and borrowings of $58.4 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.
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, 1998, such lines totaled
$149.4 million, of which $28.4 million was unused.
On April 23, 1998, the Company's Board of Directors
declared a cash dividend of $.09 per share which was
paid on June 15, 1998 to shareholders of record on June
3, 1998.
Information Technology
Much of the software currently used by the Company will
require modification to properly process data after
December 31, 1999 (the `Year 2000 Issues'). In all
locations where the Company operates, assessments have
been done to determine what modifications will be
required. In addition, detailed plans and timetables
have been developed to complete and test the necessary
remediation. The Company expects to have the majority
of all remediation and testing completed prior to June
30, 1999. The Company is also in the process of
converting and upgrading many of its internal
information systems to meet changing customer
requirements. The Company presently believes that with
these conversions and upgrades, and the remediation
efforts to existing systems, all significant Year 2000
Issues will be addressed. To date, the Company has
used both internal and external resources for the
assessment, remediation and testing of its systems. As
of June 30, 1998, approximately $2 million has been
expensed related to this assessment and remediation.
The total expense is estimated to be $7 million to $12
million. These costs are not expected to have a
material impact on the Company's financial position,
results of operations or cash flows. The Company is
also in the process of contacting significant vendors
and large customers to determine the extent to which
the Company is vulnerable to those third parties'
potential failure to remediate their own systems to
address Year 2000 Issues. While the Company does not
anticipate any such problems, failure by other
companies or governmental entities to remediate their
systems on a timely basis could have a material adverse
effect on the Company.
On January 1, 1999, eleven of the fifteen member
countries of the European Union (the "participating
countries") are scheduled to establish fixed conversion
rates between their existing sovereign currencies (the
"legacy currencies") and the euro. The participating
countries have agreed to adopt the euro as their common
legal currency on that date. Following introduction of
the euro, the legacy currencies are scheduled to 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 related to
meeting customer invoicing requirements and making
internal information systems modifications. 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.
The Company has made significant investments in
information technology systems (both hardware and
software) in the last several years in order to keep
pace with the rapid growth of the business and to
service larger and more complex customer arrangements.
The Company is currently engaged in the development of
new proprietary information systems for branch office
administration, invoicing and payroll. These systems
are in the process of being developed and are in the
early stages of implementation and deployment. As of
June 30, 1998, the Company had capitalized approximately
$64 million in software development costs. As with any
complex system design and implementation effort, there are
various risks and uncertainties, including whether such
systems will meet performance expectations and whether they
can be implemented on schedule. The Company regularly reviews
the carrying value of all capitalized software and, under
applicable accounting guidelines, is required to recognize
a loss if the unamortized balance is considered unrealizable.
The Company has determined that no such adjustment is currently
required.
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 increases in
the wages paid to these 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 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.
Item 3 - Quantitative and Qualitative Disclosures About
Market Risk
The Company's annual report on Form 10-K contains
certain disclosures about market risks affecting the
Company. There have been no material changes to the
information provided which would require additional
disclosures as of the date of this filing.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security
Holders
On April 23, 1998, at the Company's Annual Meeting of
Shareholders (the "Annual Meeting") the shareholders of
the Company voted to: (1) Elect four directors to serve
until 2001 as Class II directors and (2) ratify the
appointment of Arthur Andersen LLP as the Company's
independent auditors for 1998. In addition, Messrs.
Jon F. Chait, Dudley J. Godfrey Jr. and Marvin B.
Goodman continued as Class III directors (term expiring
1999), and Messrs. Mitchell S. Fromstein and Dennis
Stevenson continued as Class I directors (term expiring
2000). 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 J. Ira Harris 62,904,063 - 2,389,164 - -
b) Election of Terry A. Hueneke 63,435,971 - 1,857,256 - -
c) Election of Newton N. Minow 64,596,318 - 696,909 - -
d) Election of Gilbert Palay 62,914,301 - 2,378,926 - -
2.Ratification of Arthur 65,222,517 43,177 - 27,533 -
Andersen LLP as
independent auditors
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
10 Letter agreement between Manpower Inc. and
Jon F. Chait dated as of July 6, 1998
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed one current report on Form 8-
K on July 14, 1998 with respect to Item 5.
Other Events for the period ended July 6, 1998.
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 14, 1998 /s/ Michael J. Van Handel
-------------------------
Michael J. Van Handel
Senior Vice President
Chief Financial Officer,
Treasurer and Secretary
(Signing on behalf of the
Registrant)
MANPOWER INC.
5301 NORTH IRONWOOD ROAD
MILWAUKEE, WISCONSIN 53217
July 6, 1998
Mr. Jon F. Chait:
This letter will confirm our agreement with respect
to the terms of your separation of employment from
Manpower Inc. (the "Corporation"). We have agreed as
follows:
1. Resignations. By executing this letter,
you resign as Executive Vice President and Secretary
and Chief Financial Officer of the Corporation,
effective immediately. In that regard, your employment
agreement dated August 3, 1991, as amended (the
"Employment Agreement"), is hereby terminated in its
entirety and no longer of any force or effect. In
addition, you hereby resign, effective immediately, as
a director of the Corporation and as a director and/or
officer of each subsidiary and affiliate of the
Corporation for which you currently serve as a director
and/or officer.
2. Press Release; No Disparaging Remarks.
The Corporation will issue as soon as possible after
the execution of this letter a press release in the
form of Exhibit A attached hereto (the "Press Release")
with respect to your resignation. Any public
statements by you, the Corporation or any of its
directors, officers, employees or spokesmen concerning
your resignation or the circumstances surrounding it
are to be limited to statements that substantially
conform to the information set out in the Press
Release. Notwithstanding the foregoing, from and after
the date hereof, you will not make any statements or
remarks, directly or indirectly, to any persons of a
disparaging nature with respect to any of the
Corporation, its subsidiaries and/or its affiliates,
any of their business or operations, or any of their
directors, officers, employees, agents or customers,
except as required by legal process. Likewise, the
Corporation agrees to not make, and that none of its
directors, officers, or spokesmen will make, any
statements or remarks, directly or indirectly, to any
persons of a disparaging nature with respect to you,
except as required by legal process.
3. Consideration. In consideration of your
agreements made in this letter, and in full settlement
of your rights under the Employment Agreement, the
Corporation will provide the following benefits to you:
(a) The Corporation will pay to a
Godfrey & Kahn, S.C. trust account, promptly upon
execution hereof, One Million Six Hundred Eighty-
two Thousand Dollars ($1,682,000 ). The payment
will be released from the trust account and paid
to a bank account designated in writing by you
(subject to any obligations under paragraph 5(a),
below) upon the earlier of (i) the date on which
you notify the Corporation in writing that your
status has changed so that you are no longer
subject to income taxation in Belgium, and (ii)
the date on which Arthur Andersen LLP notifies the
Corporation in writing of its determination that
the payment can be made to you without being
subject to income taxation in Belgium.
(b) The Corporation will pay to you
your base compensation through the date hereof.
The Corporation also will pay to you, promptly
after the date hereof, Two Hundred Sixty-four
Thousand Dollars ($264,000), representing your
estimated prorated incentive bonus for the 1998
fiscal year of the Corporation.
(c) The Corporation will continue for a
period of one (1) year after the date hereof to
provide you with coverage under the group life,
health, and similar benefit plans and arrangements
that are being provided to you and/or your family
by the Corporation as of the date of this letter
and are not discretionary in nature, subject to
and on a basis consistent with the current terms,
conditions and overall administration of such
plans and arrangements, or with other plans or
arrangements providing you with substantially
equivalent benefits.
(d) You will be entitled to retain all
stock options until January 6, 1999. The options
may be exercised at anytime during that period in
accordance with the terms of the 1991 Executive
Stock Option and Restricted Stock Plan of the
Corporation. In addition, subject to the approval
of the Executive Compensation Committee of the
Corporation, which approval will be recommended by
the Chief Executive Officer of the Corporation,
you will be entitled to retain until January 6,
2000 all stock options held by you as of the date
hereof, and all of your stock options will
immediately terminate and no longer be of any
effect thereafter; provided that between January
7, 1999 and January 6, 2000, you will not be
entitled to retain any of your stock options after
the thirtieth (30th) day after you commence an
employment, consulting or similar relationship
with any competitor of the Corporation and/or its
subsidiaries and/or its affiliates in any
capacity, and all of your stock options will
immediately terminate and no longer be of any
effect thereafter. For purposes of this
paragraph, "competitor" means any company or a
business unit of a company that is primarily
engaged in the business of providing temporary
staffing services, contract services and training
and testing of temporary and permanent workers.
(e) You may continue to reside at your
apartment in Brussels until December 31, 1998, and
the Corporation will continue to pay the rent,
utilities, reasonable repair and maintenance
costs, and other reasonable residential expenses
until such date on the same basis as such costs
and expenses previously have been paid by the
Corporation. After December 31, 1998, the
Corporation may terminate the lease, and you will
take all actions required for such termination.
The Corporation will pay all expenses relating to
the termination of the lease.
(f) The Corporation and you will
continue our current tax equalization arrangement
relating to Belgian taxes on payments of base
compensation, incentive bonus and other income
items for Belgian tax purposes until all
obligations of either party have been satisfied
under the arrangement.
4. Return of Property. Within thirty (30)
days after the date hereof, except as provided in
paragraph 5, below, you will return to the Corporation
(i) all property of the Corporation, its subsidiaries
and/or its affiliates in your possession, and (ii) all
documents, reports, minutes, spreadsheets, financial
information, electronic media, correspondence and other
written or recorded material containing information of
the Corporation that is proprietary or confidential.
You will remove all personal items from the
Corporation's premises in Milwaukee and Brussels as
soon as practicable after the date hereof.
5. Retention of Property.
(a) You will purchase the following
items from the Corporation at a purchase price,
payable in cash promptly after the date hereof,
equal to the book value of the items reflected on
the balance sheets of the Corporation and/or its
subsidiaries: (i) the Corporation's automobile
designated for your use in the United States, (ii)
the Corporation's personal computer designated for
your use in Brussels, and (iii) the mobile phone
designated for your use. You and the Corporation
will take reasonable action necessary to transfer
title to the items listed above from the
Corporation to you. You will be responsible for
the payment of all costs and expenses of transfer
incurred by you or the Corporation.
(b) You may continue to use the
Corporation's automobile designated for your use
in Brussels until December 31, 1998 on the same
basis as you previously have used such automobile.
The Corporation will make the lease payments for
such automobile until December 31, 1998, and will
pay all expenses relating to the termination of
the lease. You will take all actions required for
such termination.
6. Other Matters.
(a) The amounts payable to you under
this letter are stated before any deductions for
FICA taxes, state and federal withholding taxes,
and other payroll deductions required to be made
by the Corporation under applicable law.
(b) This letter will be binding upon,
and inure to the benefit of, you and your heirs
and legal representatives, and the Corporation and
its successors and assigns.
(c) No amendment, change, modification,
or waiver of any of the terms, provisions or
conditions of such agreement will be effective
unless made in a writing signed by you and the
Corporation.
(d) This letter constitutes the entire
agreement between us pertaining to the subject
matters covered under this letter and supersedes
all negotiations, preliminary agreements and all
prior or contemporaneous discussions and
understandings in connection with the subject
matters of this letter.
(e) This letter will be governed by and
construed in accordance with the laws of Wisconsin
(without applying any choice of law principles).
(f) Under no circumstances will you
use or disclose any proprietary or confidential
information of the Corporation, its subsidiaries
and/or its affiliates.
(g) Neither you nor the Corporation has
an adequate remedy at law for damages in the event
that any of the agreements in this letter are
breached or otherwise not performed in accordance
with their terms. Therefore, both you and the
Corporation, in addition to and without limiting
any other remedy or right that you or the
Corporation may have, will have the right to
temporary and permanent injunctive relief (without
the necessity of posting bond or other security)
restraining a breach or violation, or further
breach or violation, of such agreements by you or
the Corporation.
If this letter correctly sets forth your
understanding of our agreement, please so indicate by
signing a copy in the place provided below and
returning it to the Corporation.
Sincerely,
MANPOWER INC.
By:/s/ Mitchell S. Fromstein
----------------------------
Mitchell S. Fromstein,
President and Chief
Executive Officer
I confirm my agreement with
the terms and conditions of this
letter.
/s/ Jon F. Chait
- -------------------
Jon F. Chait
Date: July 6, 1998