UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 19, 2005
MANPOWER INC.
(Exact name of registrant as specified in its charter)
| Wisconsin | 1-10686 | 39-1672779 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 5301 North Ironwood Road Milwaukee, Wisconsin |
53217 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (414) 961-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
On April 19, 2005, we issued a press release announcing our results of operations for the three-month period ended March 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 9.01. | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press Release dated April 19, 2005 | |
| 99.2 | Presentation materials for April 19, 2005 conference call | |
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 hereunto duly authorized.
| MANPOWER INC. | ||||||||
| Dated: | April 19, 2005 |
By: | /s/ MICHAEL J. VAN HANDEL | |||||
| Michael J. Van Handel | ||||||||
| Executive Vice President, Chief Financial Officer and Secretary | ||||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated April 19, 2005 | |
| 99.2 | Presentation materials for April 19, 2005 conference call | |
Exhibit 99.1
[MANPOWER logo]
PRESS RELEASE
FOR FURTHER INFORMATION
CONTACT:
Mike Van Handel
Chief Financial Officer
(414) 906-6305
FOR IMMEDIATE RELEASE
Manpower Reports 1st Quarter Results
MILWAUKEE, WI, USA, April 19, 2005 – Manpower Inc. (NYSE: MAN) today reported that net income for the three months ended March 31, 2005 was $32.2 million, or 35 cents per diluted share, compared to $39.6 million, or 43 cents per diluted share, a year earlier. Revenues for the first quarter were $3.8 billion, an increase of 13 percent from the year-earlier period.
Results for the first quarter were positively impacted by relatively stronger foreign currencies compared to the first quarter of 2004. On a constant currency basis, diluted earnings per share were 34 cents on a 9 percent improvement in revenues. Prior year results were favorably impacted by a non-operating gain of $14.2 million ($10.2 million net of income taxes), or 11 cents per diluted share.
Jeffrey A. Joerres, Manpower Chairman and Chief Executive Officer, said, “The Manpower organization achieved solid results for the first quarter. The U.S. and European teams performed very well. We continue to see strong results from Jefferson Wells where profits were four times last year’s results.
“We feel strongly that the investments we are making in the permanent recruitment business and office openings in emerging geographies will benefit the results of 2005. An important component to the success of the balance of 2005 will be the continued aggressive pursuit of our efficiency initiatives.
“Given the current trends, we anticipate our second quarter diluted earnings per share to be in the range of 63 to 67 cents, which includes an estimated favorable currency impact of 4 cents.”
In conjunction with its first quarter earnings release, Manpower will broadcast its conference call live over the Internet on April 19 at 7:30 a.m. CT (8:30 a.m. ET). Interested parties are invited to listen by logging on to http://investor.manpower.com.
Supplemental financial information referenced in the conference call can be found at http://investor.manpower.com.
# # #
About Manpower Inc.
Manpower Inc. (NYSE: MAN) is a world leader in the employment services industry, offering customers a continuum of services to meet their needs throughout the employment and business cycle. The company specializes in permanent, temporary and contract recruitment; employee assessment; training; career transition; organizational consulting services; and professional financial services. Manpower’s worldwide network of 4,300 offices in 68 countries and territories enables the company to meet the needs of its 400,000 customers per year, including small and medium size enterprises in all industry sectors, as well as the world’s largest multinational corporations. The focus of Manpower’s work is on raising productivity through improved quality, efficiency and cost-reduction, enabling customers to concentrate on their core business activities. In addition to the Manpower brand, the company operates under the brand names of Right Management Consultants, Jefferson Wells, Elan and Brook Street. More information on Manpower Inc. is available at www.manpower.com.
Forward-Looking Statements
This news release contains statements, including earning projections, that are forward-looking in nature and, accordingly, are subject to risks and uncertainties regarding the Company’s expected future results. The Company’s actual results may differ materially from those described or contemplated in the forward-looking statements. Factors that may cause the Company’s actual results to differ materially from those contained in the forward-looking statement can be found in the Company’s reports filed with the SEC, including the information under the heading ‘Forward-Looking Statements’ in its Annual Report on Form 10-K for the year ended December 31, 2004, which information is incorporated herein by reference.
# # #
Manpower Inc.
Results of Operations
(In millions, except per share data)
| Three Months Ended March 31 |
|||||||||||||
| % Variance |
|||||||||||||
| 2005 |
2004 |
Amount Reported |
Constant Currency |
||||||||||
| (Unaudited) | |||||||||||||
| Revenues from services (a) |
$ | 3,758.7 | $ | 3,334.1 | 12.7 | % | 8.8 | % | |||||
| Cost of services |
3,076.7 | 2,717.6 | 13.2 | % | |||||||||
| Gross profit |
682.0 | 616.5 | 10.6 | % | 6.9 | % | |||||||
| Selling and administrative expenses |
619.5 | 560.3 | 10.6 | % | 7.0 | % | |||||||
| Operating profit |
62.5 | 56.2 | 11.2 | % | 6.4 | % | |||||||
| Interest and other expense (income) |
11.7 | (4.0 | ) | N/A | |||||||||
| Earnings before income taxes |
50.8 | 60.2 | -15.7 | % | |||||||||
| Provision for income taxes |
18.6 | 20.6 | -10.0 | % | |||||||||
| Net earnings |
$ | 32.2 | $ | 39.6 | -18.6 | % | -21.7 | % | |||||
| Net earnings per share - basic |
$ | 0.36 | $ | 0.46 | -21.7 | % | |||||||
| Net earnings per share - diluted (b) |
$ | 0.35 | $ | 0.43 | -18.6 | % | -21.6 | % | |||||
| Weighted average shares - basic |
89.8 | 85.9 | 4.6 | % | |||||||||
| Weighted average shares - diluted (b) |
96.9 | 93.9 | 3.2 | % | |||||||||
| (a) | Revenues from services include fees received from our franchise offices of $8.3 million and $8.2 million for the three months ended March 31, 2005 and 2004, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $349.8 million and $321.5 million for the three months ended March 31, 2005 and 2004, respectively. |
| (b) | Prior year figures have been restated to reflect the impact of applying the “if-converted” method to our convertible debentures. |
Manpower Inc.
Operating Unit Results
(In millions)
| Three Months Ended March 31 |
|||||||||||||
| % Variance |
|||||||||||||
| 2005 |
2004 |
Amount Reported |
Constant Currency |
||||||||||
| (Unaudited) | |||||||||||||
| Revenues from Services: |
|||||||||||||
| United States (a) |
$ | 475.9 | $ | 474.6 | 0.3 | % | 0.3 | % | |||||
| France |
1,247.5 | 1,136.5 | 9.8 | % | 4.6 | % | |||||||
| EMEA |
1,333.1 | 1,140.9 | 16.8 | % | 11.8 | % | |||||||
| Jefferson Wells |
92.7 | 50.5 | 83.7 | % | 83.7 | % | |||||||
| Right |
104.0 | 101.8 | 2.2 | % | -0.3 | % | |||||||
| Other Operations |
505.5 | 429.8 | 17.6 | % | 14.9 | % | |||||||
| $ | 3,758.7 | $ | 3,334.1 | 12.7 | % | 8.8 | % | ||||||
| Operating Unit Profit: |
|||||||||||||
| United States |
$ | 4.9 | $ | 2.8 | 74.6 | % | 74.6 | % | |||||
| France |
27.5 | 28.8 | -4.3 | % | -9.4 | % | |||||||
| EMEA |
15.0 | 13.7 | 9.4 | % | 4.3 | % | |||||||
| Jefferson Wells |
8.1 | 2.0 | N/A | N/A | |||||||||
| Right |
9.8 | 9.1 | 7.6 | % | 5.1 | % | |||||||
| Other Operations |
12.5 | 15.3 | -18.3 | % | -20.2 | % | |||||||
| 77.8 | 71.7 | ||||||||||||
| Corporate expenses |
12.1 | 13.2 | |||||||||||
| Amortization of intangible assets |
3.2 | 2.3 | |||||||||||
| Operating profit |
62.5 | 56.2 | 11.2 | % | 6.4 | % | |||||||
| Interest and other expense (income) (b) |
11.7 | (4.0 | ) | ||||||||||
| Earnings before income taxes |
$ | 50.8 | $ | 60.2 | |||||||||
| (a) | In the United States, revenues from services include fees received from the related franchise offices of $5.4 million and $6.2 million for the three months ended March 31, 2005 and 2004, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $277.6 million and $263.0 million for the three months ended March 31, 2005 and 2004, respectively. |
| (b) | The components of interest and other expense (income) were: |
| Interest expense |
$ | 11.6 | $ | 11.1 | ||||
| Interest income |
(2.3 | ) | (2.4 | ) | ||||
| Foreign exchange losses |
0.8 | 0.1 | ||||||
| Miscellaneous expenses (income), net |
1.6 | (12.8 | ) | |||||
| $ | 11.7 | $(4.0) | ||||||
Manpower Inc.
Consolidated Balance Sheets
(In millions)
| Mar. 31 2005 |
Dec. 31 2004 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 396.8 | $ | 531.8 | ||||
| Accounts receivable, net |
3,002.4 | 3,227.8 | ||||||
| Prepaid expenses and other assets |
110.1 | 161.4 | ||||||
| Future income tax benefits |
111.4 | 96.5 | ||||||
| Total current assets |
3,620.7 | 4,017.5 | ||||||
| Other assets: |
||||||||
| Goodwill and other intangible assets, net |
1,286.0 | 1,297.0 | ||||||
| Other assets |
298.3 | 305.5 | ||||||
| Total other assets |
1,584.3 | 1,602.5 | ||||||
| Property and equipment: |
||||||||
| Land, buildings, leasehold improvements and equipment |
660.5 | 669.8 | ||||||
| Less: accumulated depreciation and amortization |
447.8 | 446.7 | ||||||
| Net property and equipment |
212.7 | 223.1 | ||||||
| Total assets |
$ | 5,417.7 | $ | 5,843.1 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 724.5 | $ | 687.1 | ||||
| Employee compensation payable |
143.4 | 156.0 | ||||||
| Accrued liabilities |
447.6 | 505.7 | ||||||
| Accrued payroll taxes and insurance |
490.0 | 569.6 | ||||||
| Value added taxes payable |
406.7 | 457.8 | ||||||
| Short-term borrowings and current maturities of long-term debt |
215.6 | 225.7 | ||||||
| Total current liabilities |
2,427.8 | 2,601.9 | ||||||
| Other liabilities: |
||||||||
| Long-term debt |
411.8 | 676.1 | ||||||
| Other long-term liabilities |
383.2 | 391.1 | ||||||
| Total other liabilities |
795.0 | 1,067.2 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock |
1.0 | 1.0 | ||||||
| Capital in excess of par value |
2,322.3 | 2,296.4 | ||||||
| Retained earnings |
83.2 | 51.0 | ||||||
| Accumulated other comprehensive income |
78.0 | 109.4 | ||||||
| Treasury stock, at cost |
(289.6 | ) | (283.8 | ) | ||||
| Total shareholders’ equity |
2,194.9 | 2,174.0 | ||||||
| Total liabilities and shareholders’ equity |
$ | 5,417.7 | $ | 5,843.1 | ||||
Manpower Inc.
Consolidated Statements of Cash Flows
(In millions)
| Three Months Ended March 31 |
||||||||
| 2005 |
2004 |
|||||||
| (Unaudited) | ||||||||
| Cash Flows from Operating Activities: |
||||||||
| Net earnings |
$ | 32.2 | $ | 39.6 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
23.1 | 19.7 | ||||||
| Amortization of discount on convertible debentures |
1.9 | 1.9 | ||||||
| Deferred income taxes |
(9.8 | ) | (3.6 | ) | ||||
| Provision for doubtful accounts |
4.3 | 5.9 | ||||||
| Other non-operating gains |
— | (14.2 | ) | |||||
| Changes in operating assets and liabilities excluding the impact of acquisitions: |
||||||||
| Accounts receivable |
120.7 | 39.9 | ||||||
| Other assets |
(15.4 | ) | 8.6 | |||||
| Other liabilities |
(71.0 | ) | (70.7 | ) | ||||
| Cash provided by operating activities |
86.0 | 27.1 | ||||||
| Cash Flows from Investing Activities: |
||||||||
| Capital expenditures |
(19.2 | ) | (12.3 | ) | ||||
| Acquisitions of businesses, net of cash acquired |
(2.2 | ) | (94.0 | ) | ||||
| Proceeds from sale of an equity interest |
— | 29.8 | ||||||
| Proceeds from the sale of property and equipment |
1.3 | 1.5 | ||||||
| Cash used by investing activities |
(20.1 | ) | (75.0 | ) | ||||
| Cash Flows from Financing Activities: |
||||||||
| Net borrowings of short-term facilities and long-term debt |
11.2 | 13.0 | ||||||
| Cash paid to settle convertible debentures |
(206.6 | ) | — | |||||
| Proceeds from settlement of swap agreements |
50.7 | — | ||||||
| Proceeds from stock option and purchase plans |
6.6 | 23.2 | ||||||
| Repurchases of common stock |
(47.2 | ) | — | |||||
| Cash (used) provided by financing activities |
(185.3 | ) | 36.2 | |||||
| Effect of exchange rate changes on cash |
(15.6 | ) | (4.8 | ) | ||||
| Change in cash and cash equivalents |
(135.0 | ) | (16.5 | ) | ||||
| Cash and cash equivalents, beginning of period |
531.8 | 426.2 | ||||||
| Cash and cash equivalents, end of period |
$ | 396.8 | $ | 409.7 | ||||
Exhibit 99.2
Manpower Inc.
2005 1st Quarter Results
April 19, 2005
Forward Looking Statement:
This presentation includes forward-looking statements which are subject to risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Forward-looking statements can be identified by words such as “expect,” “plan,” “may,” “will,” and similar expressions. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company’s Annual Report on Form 10-K dated December 31, 2004, which information is incorporated herein by reference, and such other factors as may be described from time to time in the Company’s SEC filings.
Consolidated Financial Highlights
Q1 Highlights
13% 9% CC Revenue $3.8B
40 bps Gross Margin 18.1%
11% 6% CC OUP Profit $63M
No Change OUP Profit Margin 1.7%
9%* 6% CC* EPS $ .35
Throughout this presentation, the difference between reported variances and Constant Currency (CC) variances represents the impact of currency on our financial results. Constant Currency is further explained on our Web site. *Excludes 2004 non-recurring gains of $10.2M after tax, or 11 cents per share.
2
Consolidated Financial Highlights
Gross Profit Margin Change
19.0% 18.0% 17.0% 16.0% 15.0%
18.49%
- 0.24%
- 0.22%
- 0.11%
- 0.08%
+ 0.11%
+ 0.19%
18.14%
Q1 2004 EMEA France Japan Jefferson Mix/ Perm Q1 2005 Wells Other Placement Staffing
3
Consolidated Financial Highlights
We made investments in the first quarter as anticipated:
- 70 new offices
- 200+ permanent recruiters
Expense and efficiency initiatives progressing and having positive impacts.
Overall market is still optimistic, however, customers and prospects are continuing to be measured in their personnel decisions.
4
United States Segment
Q1 Financial Highlights
0.3% Revenue $476M
75% OUP $5M
40 bps OUP Margin 1.0%
Operating Unit Profit (OUP) is the measure that we use to evaluate segment performance. OUP is equal to segment revenues less direct costs and branch and national headquarters operating costs.
5
France Segment
Q1 Financial Highlights
10% $1.2B
5% CC Revenue
4% 9% CC OUP $28M
30 bps OUP Margin 2.2%
6
EMEA Segment
Q1 Financial Highlights
17% 12% CC Revenue $1.3B
9% 4% CC OUP $15M
10 bps OUP Margin 1.1%
7
EMEA Segment
% of Segment Revenue Q1 Revenue Growth YoY
20% UK - Manpower 11%
8%
17% Nordics 15%
7%
16% Italy 22%
16%
12% Elan 40%
35%
7% Germany 14%
9%
7% Spain 17%
12%
6% Holland 15%
9%
15% Other 10%
3%
Revenue Growth Revenue Growth - CC
8
Jefferson Wells Segment
Q1 Financial Highlights
84% Revenue $93M
300% OUP $8M
470 bps OUP Margin 8.7%
9
Jefferson Wells – Revenue Trend
4 Large Clients
Balance of Business $111M
31
80 $103M
20
83 $93M
13
80
Q3 04 Q4 04 Q1 05
4 large clients account for the decline in revenues from Q3-04 peak.
2 of the 4 accounts were not SOX related, rather the projects were completed as planned.
10
Jefferson Wells – Client Mix
2004
16%
28%
56%
1,300 clients
Sox only clients
Clients with no SOX work
Clients with SOX and Non-SOX engagements
Client base nearly doubled in 2004 from 700 in 2003 to 1,300 in 2004. 167 new clients were added in the first quarter of 2005.
Strong blue chip client base, serving 70% of Fortune 20 and 45% of Fortune 100 companies.
11
Jefferson Wells—Client Mix
Number of Clients Over $1M
46
8 31 7
18
7
11
2003 2004
No SOX Mix SOX only
Most large accounts are using a mix of SOX and other service offerings.
Top 20 clients, on average, used 7 different service offerings and had 213 separate engagements in 2004.
12
Jefferson Wells – Future Outlook
Jefferson Wells’ market position is strong and future growth prospects are solid.
Pipeline of sales opportunities are currently at record levels.
Transitioning contractors to full-time staff to support future growth.
Retention program implemented to retain highly skilled salaried professionals.
13
Right Management Segment
Q1 Financial Highlights
2.2% $104M
0.3% CC Revenue
8%
OUP $10M
5% CC
40 bps OUP Margin 9.4%
14
Other Operations Segment
Q1 Financial Highlights
18% $506M
15% CC Revenue
18% $13M
OUP
20% CC
110 bps OUP Margin 2.5%
15
Other Operations Segment
% of Segment Revenue Q1 Revenue Growth YoY
11%
43% Japan
8%
13%
18% Australia/NZ
11%
Mexico 18%
12% 20%
35%
27% Other
29%
Revenue Growth Revenue Growth - CC
16
Financial Highlights
17
Balance Sheet Highlights – Q1
Total Debt $ in millions
1000 800 600 400 200 0
2002 2003 2004 Q1 2005
822
538
842
416
902
370
627
231
Total Debt to Total Capitalization
Percent 60% 50% 40% 30% 20% 10% 0
2002 2003 2004 Q1 2005
45%
39%
29%
22%
Net Debt Total Debt
18
Cash Flow Summary - Q1
(in millions) 2005 2004
Cash from Operations $86 $27
Capital Expenditures (19) (12)
Free Cash Flow 67 15
Share Repurchases * (47) -
Change in Debt (145) 13
Other (10) (45)
Decrease in Cash $(135) $(17)
* 1,065,000 shares
19
Second Quarter Outlook
Revenue
U.S. Up 1-3%
France Up 11-14% (Up 3-6% CC)
EMEA Up 19-21% (Up 11-13% CC)
Jefferson Wells Up 15-20%
Right Down 11-13% (Down 13-15% CC)
Other Up 17-19% (Up 12-14% CC)
Total Up 12-14% (Up 6-8% CC)
Gross Profit Margin 18.1 - 18.3%
Operating Profit Margin 2.5 - 2.7%
Tax Rate 36.5%
EPS $.63 - $.67 ($.04 Currency)
20
Manpower Inc.
2005 1st Quarter Results
April 19, 2005
Questions