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:
September 30, 2000
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 September 30, 2000
Common Stock, $.01 par value 75,738,824
MANPOWER INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets 3-4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7-10
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
Item 3 Quantitative and Qualitative Disclosures About Market Risk 14
PART II OTHER INFORMATION AND SIGNATURES
Item 6 Exhibits and Reports on Form 8-K 15
Signatures 16
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MANPOWER INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions)
ASSETS
September 30, December 31,
2000 1999
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 175.3 $ 241.7
Accounts receivable, less allowance
for doubtful accounts of $54.1 and
$47.1, respectively 2,090.7 1,897.6
Prepaid expenses and other assets 56.6 66.0
Future income tax benefits 57.6 52.0
------------ ------------
Total current assets 2,380.2 2,257.3
OTHER ASSETS:
Investments in licensees 39.5 37.0
Intangible assets, less accumulated amortization
of $23.4 and $16.3, respectively 207.5 89.4
Other assets 174.2 152.6
------------ ------------
Total other assets 421.2 279.0
PROPERTY AND EQUIPMENT:
Land, buildings, leasehold improvements and equipment 413.3 416.1
Less: accumulated depreciation and amortization 240.1 233.7
------------ ------------
Net property and equipment 173.2 182.4
------------ ------------
Total assets $ 2,974.6 $ 2,718.7
============ ============
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
MANPOWER INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
2000 1999
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 443.1 $ 388.0
Employee compensation payable 79.7 71.9
Accrued liabilities 224.2 180.2
Accrued payroll taxes and insurance 321.0 340.9
Value added taxes payable 318.7 305.6
Short-term borrowings and current
maturities of long-term debt 126.4 131.5
------------ ------------
Total current liabilities 1,513.1 1,418.1
OTHER LIABILITIES:
Long-term debt 491.1 357.5
Other long-term liabilities 295.1 292.5
------------ ------------
Total other liabilities 786.2 650.0
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value,
authorized 25,000,000 shares, none issued - -
Common stock, $0.01 par value, authorized
125,000,000 shares, issued 84,684,124 and
84,272,460 shares, respectively 0.8 0.8
Capital in excess of par value 1,630.0 1,621.4
Accumulated deficit (542.9) (653.0)
Accumulated other comprehensive income (loss) (162.8) (88.8)
Treasury stock at cost, 8,945,200 and
8,286,400 shares, respectively (249.8) (229.8)
------------ ------------
Total shareholders' equity 675.3 650.6
------------ ------------
Total liabilities and shareholders' equity $ 2,974.6 $ 2,718.7
============ ============
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 millions, except per share data)
3 Months Ended 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues from services $ 2,820.9 $ 2,606.8 $ 8,103.3 $ 7,109.6
Cost of services 2,313.5 2,155.0 6,672.2 5,872.9
--------- --------- --------- ---------
Gross profit 507.4 451.8 1,431.1 1,236.7
Selling and administrative expenses 411.5 369.0 1,215.0 1,089.7
--------- --------- --------- ---------
Operating profit 95.9 82.8 216.1 147.0
Interest and other expense 12.1 7.1 33.6 16.9
--------- --------- --------- ---------
Earnings before income taxes 83.8 75.7 182.5 130.1
Provision for income taxes 29.7 26.8 64.8 28.8
--------- --------- --------- ---------
Net earnings $ 54.1 $ 48.9 $ 117.7 $ 101.3
========= ========= ========= =========
Net earnings per share $ 0.71 $ 0.64 $ 1.55 $ 1.30
========= ========= ========= =========
Net earnings per share - diluted $ 0.70 $ 0.63 $ 1.52 $ 1.29
========= ========= ========= =========
Weighted average common shares 75.8 76.2 76.0 77.7
========= ========= ========= =========
Weighted average common shares
- diluted 77.1 77.1 77.2 78.5
========= ========= ========= =========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Supplemental Systemwide Information (Unaudited)
(in millions)
3 Months Ended 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Systemwide Sales $ 3,226.1 $ 3,071.4 $ 9,323.6 $ 8,390.0
========= ========= ========= =========
Systemwide information represents the total of Company-owned
branches and franchises.
MANPOWER INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in millions)
9 Months Ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 117.7 $ 101.3
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization 52.0 51.3
Deferred income taxes (7.5) 1.3
Provision for doubtful accounts 17.3 12.8
Changes in operating assets and liabilities:
Change in amounts advanced under the
Receivables Facility (70.0) -
Accounts receivable (321.2) (362.2)
Other assets (11.2) (41.3)
Other liabilities 269.0 161.4
--------- ---------
Cash provided (used) by operating activities 46.1 (75.4)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (50.9) (53.4)
Proceeds from the sale of property and equipment 4.1 13.3
Acquisitions of businesses, net of cash aquired (162.6) (9.4)
--------- ---------
Cash used by investing activities (209.4) (49.5)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in payable to banks (3.8) 14.7
Proceeds from long-term debt 268.1 304.7
Repayment of long-term debt (107.4) (149.4)
Proceeds from stock option and purchase plans 8.6 6.0
Repurchase of common stock (20.0) (80.3)
Dividends paid (7.6) (7.8)
--------- ---------
Cash provided by financing activities 137.9 87.9
--------- ---------
Effect of exchange rate changes on cash (41.0) (5.0)
--------- ---------
Net change in cash and cash equivalents (66.4) (42.0)
Cash and cash equivalents, beginning of period 241.7 180.5
--------- ---------
Cash and cash equivalents, end of period $ 175.3 $ 138.5
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 23.1 $ 10.8
========= =========
Income taxes paid $ 56.8 $ 48.6
========= =========
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 Nine Months Ended September 30, 2000 and 1999
(in millions, 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 1999
Annual Report to Shareholders.
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.
Certain amounts in the 1999 consolidated financial
statements have been reclassified to be consistent with
the current year presentation.
(2) New Accounting Pronouncements
Since June 1998, the Financial Accounting Standards
Board ("FASB") has issued SFAS Nos. 133, 137, and 138
related to "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133, as amended" or
"Statements"). These Statements establish 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
Statements require 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. The Company is required to
adopt these Statements on January 1, 2001.
The Company has identified all instruments currently in
place that will be subject to the requirements of SFAS
No. 133, as amended. Based on the nature and value of
the instruments identified, the impact of adopting SFAS
No. 133, as amended, is not expected to have a material
impact on the consolidated financial statements.
However, these Statements could increase volatility in
future earnings and other comprehensive income once
adopted by the Company.
(3) Acquisitions
During January 2000, the Company acquired Elan Group
Limited ("Elan"), a European specialty IT staffing
company with significant operations in the U.K. and
several other countries throughout the world. As of
September 30, 2000, the total consideration paid for
Elan was approximately $116.2. In addition, there is
approximately $30.0 in deferred consideration expected
to be paid during 2001. This transaction was accounted
for as a purchase and the excess of the purchase price
over the fair value of net assets acquired was recorded
as intangible assets.
Throughout the first nine months of 2000, the Company
also acquired and invested in several companies
throughout the world. The total consideration paid for
such transactions was $51.0 as of September 30, 2000,
the majority of which was recorded as intangible
assets.
(4) Income Taxes
The Company provided for income taxes during the first
nine months of 2000 at a rate of 35.5%, which is equal
to the estimated annual effective tax rate based on
information currently available. This rate is higher
than the U.S. Federal statutory rate due to foreign tax
rate differences and U.S. state income taxes.
(5) Debt
Interest Rate Swaps
During June 2000, the Company entered into various
interest rate swap agreements in order to fix its
interest costs on a portion of its Euro and Yen
denominated variable rate borrowings. The Euro
interest rate swap agreements have a notional value of
Euro 100.0 ($88.0), a weighted average fixed rate of
6.1% and expire in 2010. The Yen interest rate swap
agreement has a notional value of Yen 4,000.0 ($36.9),
a fixed rate of 1.2% and expires in 2003. These swap
agreements have had an immaterial impact on the
recorded interest expense during 2000. As of September
30, 2000, the weighted average variable interest rate
under the revolving credit agreement was 3.4%.
Euro Notes
On March 7, 2000, the Company issued Euro 150.0 in
unsecured notes, due March 2005, with an effective
interest rate of 6.3%. Net proceeds of $143.1 from the
issuance were used to repay amounts under the Company's
unsecured revolving credit agreement.
(6) Earnings Per Share
The calculations of net earnings per share and net
earnings per share - diluted are as follows:
3 Months Ended 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Net earnings per share:
Net earnings available to
common shareholders $ 54.1 $ 48.9 $117.7 $101.3
Weighted average common shares
outstanding 75.8 76.2 76.0 77.7
------ ------ ------ ------
$ 0.71 $ 0.64 $ 1.55 $ 1.30
====== ====== ====== ======
Net earnings per share - diluted:
Net earnings available to
common shareholders $ 54.1 $ 48.9 $117.7 $101.3
Weighted average common shares
outstanding 75.8 76.2 76.0 77.7
Effect of dilutive stock options 1.3 0.9 1.2 0.8
------ ------ ------ ------
77.1 77.1 77.2 78.5
------ ------ ------ ------
$ 0.70 $ 0.63 $ 1.52 $ 1.29
====== ====== ====== ======
(7) Retirement Plans
On February 29, 2000, the Company froze all benefits in
each of its U.S. defined benefit pension plans. The
Company also offered a voluntary early retirement
package and certain other benefits to eligible
employees. These benefits are expected to be paid from
the respective defined benefit pension plans. In
addition, the Company will no longer provide medical
and dental benefits under its U.S. retiree health care
plan to certain employees retiring on or after March 1,
2000. The net impact of these plan changes was not
material to the consolidated financial statements.
(8) Shareholders' Equity
Comprehensive Income (Loss)
Total comprehensive income (loss) consists of net
earnings and foreign currency translation adjustments
and is as follows:
3 Months Ended 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Net earnings $ 54.1 $ 48.9 $117.7 $101.3
Foreign currency translation
adjustments (29.3) 10.6 (74.0) (51.6)
------- ------- ------- -------
Total comprehensive income (loss) $ 24.8 $ 59.5 $ 43.7 $ 49.7
======= ======= ======= =======
Forward Equity Contract
During September 2000, the Company entered into a
forward repurchase agreement to purchase shares of its
common stock under its share repurchase program. Under
the agreement, the Company will, from time to time over
the next two years, repurchase a total of one million
shares at a forward price of $31.70, which approximates
the market price at the inception of the agreement,
plus a financing charge. The Company may choose the
method by which it settles the agreement (i.e., cash or
shares). As of September 30, 2000, no shares have been
purchased under this agreement.
(9) Interest and Other Expense
Interest and other expense consists of the following:
3 Months Ended 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Interest expense $ 9.8 $ 4.9 $ 25.6 $ 12.7
Interest income (1.8) (1.7) (5.5) (5.7)
Foreign exchange losses 0.5 0.1 1.9 1.0
Loss on sale of accounts receivable 2.1 2.5 7.4 7.1
Miscellaneous, net 1.5 1.3 4.2 1.8
------- ------ ------- -------
Total $ 12.1 $ 7.1 $ 33.6 $ 16.9
======= ====== ======= =======
(10) Segment Information
Segment information is as follows:
3 Months Ended 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues from services:
United States (a) $ 638.1 $ 583.5 $1,811.6 $1,659.5
France 1,036.4 1,045.2 2,971.0 2,766.5
United Kingdom 368.3 306.1 1,080.5 843.6
Other Europe 480.3 438.2 1,399.6 1,196.3
Other Countries 297.8 233.8 840.6 643.7
-------- -------- -------- --------
$2,820.9 $2,606.8 $8,103.3 $7,109.6
======== ======== ======== ========
Operating Unit Profit:
United States $ 25.0 $ 22.5 $ 63.5 $ 56.8
France 39.3 33.6 91.6 68.3
United Kingdom 14.9 13.1 32.5 27.4
Other Europe 24.7 20.3 57.2 45.7
Other Countries 4.4 3.7 9.5 7.5
-------- -------- -------- --------
108.3 93.2 254.3 205.7
Corporate expenses 9.3 8.6 28.2 25.7
Amortization of intangible assets 3.1 1.8 10.0 5.0
Non-recurring expenses (b) - - - 28.0
Interest and other expense 12.1 7.1 33.6 16.9
-------- -------- -------- --------
Earnings before income taxes $ 83.8 $ 75.7 $ 182.5 $ 130.1
======== ======== ======== ========
(a)Total systemwide sales in the United States,
which includes sales of Company-owned branches and
franchises, were $990.8 and $985.6 for the three
months ended September 30, 2000 and 1999,
respectively, and $2,878.1 and $2,766.5 for the
nine months ended September 30, 2000 and 1999,
respectively.
(b)Represents non-recurring items ($16.4 after
tax) in the second quarter of 1999 related to
employee severances, retirement costs and other
associated realignment costs.
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Operating Results - Three Months Ended September 30,
2000 and 1999
Revenues increased 8.2% to $2,820.9 million for the
third quarter of 2000. Revenues were unfavorably
impacted by changes in currency exchange rates during
the third quarter of 2000 due to the strengthening of
the U.S. Dollar, as compared to the third quarter of
1999, relative to the currencies in the Company's
European markets. At constant exchange rates, the
increase in revenues would have been 18.0%. Volume, as
measured by billable hours of branch operations,
increased 9.2% in the quarter. All of the Company's
major markets experienced revenue increases, as
measured in their local currencies, including the
United States (9.3%), France (14.6%) and the United
Kingdom (30.4%). The revenue increase in the United
Kingdom was favorably impacted by the Elan acquisition
(see Note 3 to the consolidated financial statements).
The Company's Other Europe and Other Countries segments
reported constant currency revenue increases of 24.2%
and 25.9%, respectively.
Gross profit, which represents revenues less payroll
and related expenses of temporary workers, increased as
a percent of revenues to 18.0% in the third quarter of
2000 from 17.3% in the third quarter of 1999. This
increase is primarily due to increased margins in
certain European markets as a result of enhanced
pricing and continued focus on higher margin business.
Selling and administrative expenses were 14.6% of
revenues in the third quarter of 2000, compared to
14.2% for the same period in the prior year. This
expense level reflects our continued investments in new
or expanding markets.
Interest and other expense was $12.1 million in the
third quarter of 2000 compared to $7.1 million in the
third quarter of 1999. This increase is primarily due
to an increase in interest expense related to the
higher borrowing levels needed to finance the
acquisitions made throughout 2000, the continued
investments in new or expanding markets and the share
repurchase program.
The Company provided for income taxes during the third
quarter of 2000 at a rate of 35.5%, which is equal to
the estimated annual effective tax rate based on
information currently available. This rate is higher
than the U.S. Federal statutory rate due to foreign tax
rate differences and U.S. state income taxes.
On a diluted basis, net earnings per share was $0.70 in
the third quarter of 2000 compared to $0.63 in the
third quarter of 1999. The net earnings per share, on
a diluted basis, for the third quarter of 2000 was
negatively impacted by $0.08 due to changes in exchange
rates. Diluted weighted average shares for the third
quarter of 2000 was equal to the third quarter of 1999,
as the Company's treasury stock purchases offset
issuances and an increase in the number of dilutive
stock options because of the higher average share price
during the third quarter of 2000 compared to the third
quarter of 1999.
Operating Results - Nine Months Ended September 30,
2000 and 1999
Revenues increased 14.0% to $8,103.3 million for the
first nine months of 2000. Revenues were unfavorably
impacted by changes in currency exchange rates during
the first nine months of 1999 due to the strengthening
of the U.S. Dollar, as compared to the first nine
months of 1999, relative to the currencies in the
Company's European markets. At constant exchange
rates, the increase in revenues would have been 22.6%.
Volume, as measured by billable hours of branch
operations, increased 14.1% in the first nine months of
2000 compared to 1999. All of the Company's major
markets experienced revenue increases, as measured in
their local currencies, including the United States
(9.2%), France (22.6%) and the United Kingdom (34.6%).
The revenue increase in the United Kingdom was
favorably impacted by the Elan acquisition (see Note 3
to the consolidated financial statements). The
Company's Other Europe and Other Countries segments
reported constant currency revenue increases of 30.6%
and 26.7%, respectively.
Gross profit, which represents revenues less payroll
and related expenses of temporary workers, increased as
a percent of revenues to 17.7% in the first nine months
of 2000 from 17.4% for the same period in 1999. This
increase is primarily due to increased margins in
certain European markets as a result of enhanced
pricing and continued focus on higher margin business.
Selling and administrative expenses were 15.0% of
revenues in the first nine months of 2000 compared to
14.9% for the same period in 1999 excluding the non-
recurring items incurred during 1999. This expense
level reflects continued investments in new or
expanding markets.
Interest and other expense was $33.6 million in the
first nine months of 2000 compared to $16.9 million
during the same period in 1999. This increase is
primarily due to an increase in interest expense
related to the higher borrowing levels needed to
finance the acquisitions made throughout 2000, the
continued investments in new or expanding markets and
the share repurchase program.
The Company provided for income taxes during the first
nine months of 2000 at a rate of 35.5%, which is equal
to the estimated annual effective tax rate based on
information currently available. This rate is higher
than the U.S. Federal statutory rate due to foreign tax
rate differences and U.S. state income taxes. During
the nine month period ended September 30, 1999, the
Company had a one-time tax benefit of $15.7 million in
connection with the dissolution of a non-operating
subsidiary.
On a diluted basis, net earnings per share was $1.52
for the first nine months of 2000 compared to $1.29 for
the same period in 1999. The net earnings per share, on
a diluted basis, for the first nine months of 2000 was
negatively impacted by $0.19 due to changes in exchange
rates. Excluding the non-recurring items and one-time
income tax gain in the first nine months of 1999, net
earnings per share on a diluted basis would have been
$1.30. The diluted weighted average shares decreased
by 1.7% for the first nine months of 2000 due to the
Company's treasury stock purchases, which were
partially offset by an increased number of dilutive
stock options because of the higher average share price
during the first nine months of 2000 compared to the
first nine months of 1999.
Liquidity and Capital Resources
Cash provided by operating activities was $46.1 million
in the first nine months of 2000 compared to cash used
by operating activities of $75.4 million in the first
nine months of 1999. This change reflects the
increased earnings during the first nine months of 2000
and the change in working capital requirements between
periods. Cash provided by operating activities before
the changes in working capital requirements was $179.5
million in the first nine months of 2000 compared to
$166.7 million in the first nine months of 1999. Cash
used by changes in working capital was $133.4 million
and $242.1 million in the first nine months of 2000 and
1999, respectively.
Capital expenditures were $50.9 million in the first
nine months of 2000 compared to $53.4 million during
the first nine months of 1999. These expenditures were
primarily comprised of purchases of computer equipment,
office furniture and other costs related to office
openings and refurbishments.
During January 2000, the Company acquired Elan Group
Limited ("Elan"), a European specialty IT staffing
company with significant operations in the U.K. and
several other countries throughout the world. As of
September 30, 2000, the total consideration paid for
Elan was approximately $116.2 million. In addition,
there is approximately $30.0 million in deferred
consideration expected to be paid during 2001.
During the first nine months of 2000, the Company also
acquired and invested in several companies throughout
the world. The total consideration paid for such
transactions was $51.0 million as of September 30,
2000, the majority of which was recorded as intangible
assets.
Net cash provided by additional borrowings was $156.9
million and $170.0 million in the first nine months of
2000 and 1999, respectively. The additional borrowings
in 2000 were primarily used to fund the acquisitions
and investments made throughout 2000, to support the
working capital growth and to repurchase the Company's
common stock. The Company repurchased 658,800 shares
at a cost of $20.0 million during the first nine months
of 2000. The additional borrowings in 1999 were
primarily used to support the working capital growth,
investments in new markets and to repurchase the
Company's common stock.
Accounts receivable increased to $2,090.7 million at
September 30, 2000 from $1,897.6 million at December
31, 1999. This increase is partially due to a $70.0
million reduction in the amount advanced under the
Company's U.S. Receivable Facility from December 31,
1999 to September 30, 2000. The remaining increase is
due to the growth in many of the Company's foreign
markets and the impact of 2000 acquisitions, offset by
the impact of changes in exchange rates. At December
31, 1999 exchange rates, the September 30, 2000
receivable balance would have been $228.0 million
higher.
As of September 30, 2000, the Company had borrowings of
$157.3 million and letters of credit of $60.0 million
outstanding under its $415.0 million U.S. revolving
credit facility, and borrowings of $6.7 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.
During June 2000, the Company entered into various
interest rate swap agreements in order to fix its
interest costs on a portion of its Euro and Yen
denominated variable rate borrowings. The Euro
interest rate swap agreements have a notional value of
Euro 100.0 million ($88.0 million), a weighted average
fixed rate of 6.1% and expire in 2010. The Yen
interest rate swap agreement has a notional value of
Yen 4.0 billion ($36.9 million), a fixed rate of 1.2%
and expires in 2003. These swap agreements have had an
immaterial impact on the recorded interest expense
during 2000. As of September 30, 2000, the weighted
average variable interest rate under the revolving
credit agreement was 3.4%.
On March 7, 2000, the Company issued Euro 150.0 million
in unsecured notes, due March 2005, with an effective
interest rate of 6.3%. Net proceeds of $143.1 million
from the issuance were used to repay amounts under the
Company's unsecured revolving credit agreement.
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 September 30, 2000, such lines
totaled $214.4 million, of which $94.3 million was unused.
During September 2000, the Company entered into a
forward repurchase agreement to purchase shares of its
common stock under its share repurchase program. Under
the agreement, the Company will, from time to time over
the next two years, repurchase a total of one million
shares at a forward price of $31.70, which approximates
the market price at the inception of the agreement,
plus a financing charge. The Company may choose the
method by which it settles the agreement (i.e., cash or
shares). As of September 30, 2000, no shares have been
purchased under this agreement.
The Euro
On January 1, 1999, eleven of the fifteen 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. Beginning on January 1, 2002, Euro-denominated
bills and coins will be issued and legacy currencies
will be withdrawn from circulation.
The Company has significant operations in many of the
participating countries and continues to assess the
impact of the Euro on its business operations. Since
the Company's labor costs and prices are generally
determined on a local basis, the near-term impact of
the Euro has been and is expected to be primarily
related to making internal information systems
modifications to meet customer invoicing and financial
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.
On a long-term basis, the Company believes that the
introduction of the Euro may cause a greater level of
price harmonization between participating countries,
notwithstanding certain country-specific costs. In
addition, the Company expects to begin paying permanent
employees and temporary workers in the participating
countries in Euro during 2001.
The Company will account for all related system
modification costs in accordance with its existing
policy and does not expect such costs to be material to
the Company's consolidated financial statements.
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 and the expansion into new markets or service
lines
* 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
* difficulties related to acquisitions, including
integrating the acquired companies and achieving the
expected benefits
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 1999 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 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed one current report on Form 8-K
dated July 25, 2000 with respect to Item 5 - Other Events.
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: November 13, 2000 /s/ Michael J. Van Handel
--------------------------------------
Michael J. Van Handel
Senior Vice President, Chief
Financial Officer and Secretary
(Signing on behalf of the
Registrant and as the Principal
Financial Officer and Principal
Accounting Officer)
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