1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended: June 30, 1999 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 at June 30, Class 1999 Common Stock, $.01 par value 76,719,316
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 - 10 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 11 - 15 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 15 PART II - OTHER INFORMATION AND SIGNATURES Item 4 - Submission of Matters to a Vote of Security Holders 16 Item 5 - Other Information 16 Item 6 - Exhibits and Reports on Form 8-K 17 Signatures 18
PART I - FINANCIAL INFORMATION Item 1 - Financial Statements MANPOWER INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) ASSETS June 30, December 31, 1999 1998 (unaudited) CURRENT ASSETS: Cash and cash equivalents $116,788 $180,456 Accounts receivable, less allowance for doubtful accounts of $40,302 and $39,504, respectively 1,654,099 1,674,729 Prepaid expenses and other assets 62,501 53,565 Future income tax benefits 51,099 52,812 Total current assets 1,884,487 1,961,562 OTHER ASSETS: Investments in licensees 34,512 33,055 Other assets 219,658 195,223 Total other assets 254,170 228,278 PROPERTY AND EQUIPMENT: Land, buildings, leasehold improvements and equipment 396,097 411,391 Less: accumulated depreciation and amoritization 217,621 220,131 Net property and equipment 178,476 191,260 Total assets $2,317,133 $2,381,100 The accompanying notes to consolidated financial statements are an integral part of these balance sheets.
MANPOWER INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, except share data) LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1999 1998 (unaudited) CURRENT LIABILITIES: Payable to banks $ 51,511 $ 99,268 Accounts payable 410,790 347,864 Employee compensation payable 69,204 77,084 Accrued liabilities 159,402 154,428 Accrued payroll taxes and insurance 275,245 319,053 Value added and income taxes payable 265,809 309,283 Current maturities of long-term debt 3,587 4,076 Total current liabilities 1,235,548 1,311,056 OTHER LIABILITIES: Long-term debt 211,400 154,594 Other long-term liabilities 271,908 246,512 Total other liabilities 483,308 401,106 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, authorized 25,000,000 shares, none issued - - Common stock, $.01 par value, authorized 125,000,000 shares, issued 83,541,916 and 83,279,149 shares, respectively 835 833 Capital in excess of par value 1,607,730 1,602,721 Accumulated deficit (742,981) (787,699) Accumulated other comprehensive loss (80,083) (17,895) Treasury stock at cost, 6,822,600 and 4,349,400 shares, respectively (187,224) (129,022) Total stockholders' equity 598,277 668,938 Total liabilities and stockholders' equity $2,317,133 $2,381,100 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, 1999 1998 1999 1998 Revenues from services $2,327,597 $2,136,103 $4,502,833 $4,008,969 Cost of services 1,922,879 1,775,718 3,717,881 3,321,226 Gross profit 404,718 360,385 784,952 687,743 Selling and administrative expenses 377,306 315,450 720,748 606,045 Operating profit 27,412 44,935 64,204 81,698 Interest and other expense 5,047 4,352 9,887 7,496 Earnings before income taxes 22,365 40,583 54,317 74,202 Provision for income taxes (9,420) 14,411 1,924 26,340 Net earnings $ 31,785 $ 26,172 $ 52,393 $ 47,862 Net earnings per share $ .41 $ .32 $ .67 $ .59 Net earnings per share - diluted $ .40 $ .32 $ .66 $ .58 Weighted average common shares 77,789 80,646 78,413 80,602 Weighted average common shares - diluted 78,508 82,031 79,196 82,012 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, 1999 1998 1999 1998 Systemwide Sales $2,756,067 $2,561,343 $5,318,537 $4,838,259 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, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $52,393 $47,862 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 33,151 26,586 Deferred income taxes (13) 223 Provision for doubtful accounts 6,513 7,186 Changes in operating assets and liabilities: Accounts receivable (125,835) (232,452) Other assets (33,794) (12,641) Other liabilities 83,753 154,419 Cash provided (used) by operating activities 16,168 (8,817) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (38,703) (63,322) Proceeds from the sale of property and equipment 10,272 882 Acquisitions of businesses, net of cash acquired (2,518) (6,913) Cash used by investing activities (30,949) (69,353) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in payable to banks (33,194) 51,560 Proceeds from long-term debt 61,161 40,292 Repayment of long-term debt (4,845) (757) Proceeds from stock option and purchase plans 5,012 9,515 Repurchase of common stock (58,202) - Dividends paid (7,675) (7,263) Cash (used) provided by financing activities (37,743) 93,347 Effect of exchange rate changes on cash (11,144) (1,872) Net change in cash and cash equivalents (63,668) 13,305 Cash and cash equivalents, beginning of period 180,456 142,246 Cash and cash equivalents, end of period $116,788 $155,551 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $7,601 $4,157 Income taxes paid $37,763 $16,011 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, 1999 and 1998 (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 1998 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. (2) Accounting Policies The Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" in June 1998. 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. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133" which defers the required adoption date of SFAS No. 133 until 2001 for the Company, however early adoption is allowed. 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) Earnings Per Share The calculations of net earnings per share and net earnings per share - diluted are as follows: 3 Months Ended 6 Months Ended June 30, June 30, 1999 1998 1999 1998 Net earnings per share: Net earnings available to common shareholders $ 31,785 $ 26,172 $ 52,393 $ 47,862 Weighted average common shares outstanding 77,789 80,646 78,413 80,602 $ .41 $ .32 $ .67 $ .59 Net earnings per share - diluted: Net earnings available to common shareholders $ 31,785 $ 26,172 $ 52,393 $ 47,862 Weighted average common shares outstanding 77,789 80,646 78,413 80,602 Effect of dilutive stock options 719 1,385 783 1,410 78,508 82,031 79,196 82,012 $ .40 $ .32 $ .66 $ .58 (4) Income Taxes The Company had a one-time tax benefit of $15.7 million during the quarter ended June 30, 1999 in connection with the Company's dissolution of a non-operating subsidiary. Exclusive of the effect of this benefit, the Company provided for income taxes at 35.5%, which is equal to the estimated annual effective tax rate based on the currently available information. This rate is higher than the U.S. Federal statutory rate due to foreign tax rate differences and U.S. state income taxes. (5) Stockholders' Equity Total comprehensive income (loss) consists of net earnings and foreign currency translation adjustments and is as follows: 3 Months Ended 6 Months Ended June 30, June 30, 1999 1998 1999 1998 Net earnings $ 31,785 $ 26,172 $ 52,393 $ 47,862 Foreign currency translation adjustments (20,856) 4,631 (62,188) (5,929) Total comprehensive income (loss) $ 10,929 $ 30,803 $ (9,795) $ 41,933 On April 26, 1999, the Company's Board of Directors declared a cash dividend of $.10 per share which was paid on June 14, 1999 to shareholders of record on June 2, 1999.
(6) Interest Rate Swap The Company has 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 six months of 1999. As of June 30, 1999, the variable interest rate under the revolving credit agreement was 5.3%. (7) Business Segment Data by Geographical Area Geographical segment information is as follows: 3 Months Ended 6 Months Ended June 30, June 30, 1999 1998 1999 1998 Revenues from services: United States (a) $ 560,092 $ 538,499 $1,075,921 $1,037,572 France 893,336 900,685 1,721,359 1,622,074 United Kingdom 264,704 254,473 537,507 502,707 Other Europe 357,212 262,207 684,134 493,045 Other Countries 252,253 180,239 483,912 353,571 $2,327,597 $2,136,103 $4,502,833 $4,008,969 Operating Unit Profit: United States $ 21,023 $ 20,284 $ 34,341 $ 35,544 France 21,302 18,150 34,665 30,216 United Kingdom 7,467 5,592 14,338 12,985 Other Europe 12,582 7,310 21,941 13,427 Other Countries 4,269 5,458 7,661 12,617 66,643 56,794 112,946 104,789 Corporate expenses (9,559) (10,670) (17,489) (20,667) Amortization of intangible assets (1,672) (1,189) (3,253) (2,424) Non-recurring expenses (b) (28,000) - (28,000) - Operating profit 27,412 44,935 64,204 81,698 Interest and other expense 5,047 4,352 9,887 7,496 Earnings before income taxes $ 22,365 $ 40,583 $ 54,317 $ 74,202 (a) Total systemwide sales in the United States, which includes sales of Company-owned branches and franchises, was $930,526 and $894,951 for the three months ended June 30, 1999 and 1998, respectively, and $1,780,916 and $1,726,200 for the six months ended June 30, 1999 and 1998, respectively. (b) Represents non-recurring items ($16,400 after tax) in the second quarter of 1999 related to employee severances, retirement costs and other associated realignment costs.
(8) Subsequent Events On July 26, 1999, the Company issued euro200,000 in unsecured notes with an effective interest rate of 5.69%, due in July 2006. Net proceeds from the issuance were used to repay amounts under the Company's unsecured revolving credit agreement and the commercial paper program.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Results - Three Months Ended June 30, 1999 and 1998 Revenues increased 9.0% to $2,327.6 million for the second quarter of 1999. Revenues were unfavorably impacted by changes in currency exchange rates during the second quarter of 1999 due to the strengthening of the U.S. Dollar, as compared to the second quarter of 1998, 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 10.1%. Volume, as measured by billable hours of branch operations, increased 7.7% in the quarter. All of the Company's major markets experienced revenue increases, as measured in their local currencies, including the United States (4.0%), France (2.4%) and the United Kingdom (7.0%). The Company's Other Europe and Other Countries segments reported revenue increases, as measured in their local currencies, of 41.7% and 24.6%, respectively. Cost of services, which consists of payroll and related expenses of temporary workers, decreased as a percentage of revenues to 82.6% in the second quarter of 1999 from 83.1% in the second quarter of 1998. Gross margins increased in France during the quarter due to enhanced pricing. Selling and administrative expenses increased 19.6% to $377.3 million in the quarter, primarily due to non- recurring items totaling $28.0 million ($16.4 million after tax) related to employee severances, retirement costs and other associated realignment costs. Excluding these non-recurring items, selling and administrative expenses remained constant with the first quarter of 1999 level despite the Company's continued investments in new or expanding markets. Interest and other expense was $5.0 million in the second quarter of 1999 compared to $4.4 million in the second quarter of 1998. Net interest expense, plus the cost of the U.S. accounts receivable securitization program in 1999, was $4.3 million and $2.4 million in the second quarter of 1999 and 1998, respectively. This increase is primarily due to higher borrowing levels to finance the share repurchase program and the Company's investment in new markets. Translation gains were $100,000 in the second quarter of 1999 compared to losses of $1.2 million in the second quarter of 1998. The Company had a one-time tax benefit of $15.7 million during the quarter ended June 30, 1999 in connection with the Company's dissolution of a non-operating subsidiary. Exclusive of the effect of the benefit, the Company provided for income taxes at 35.5%, which is equal to the estimated annual effective tax rate based on the currently available information. 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 $.40 in the second quarter of 1999 compared to $.32 in the secon++d quarter of 1998. Excluding the non-recurring items and one-time income tax gain, net earnings per share on a diluted basis would have been $.41 in the second quarter of 1999. The diluted weighted average shares decreased by 4.3% for the quarter due to the Company's treasury stock purchases and a smaller effect of dilutive stock options (see Note 3 to the Consolidated Financial Statements) because of the lower average share price during the quarter. Operating Results - Six Months Ended June 30, 1999 and 1998 Revenues increased 12.3% to $4,502.8 million for the first six months of 1999. Revenues were unfavorably impacted by changes in currency exchange rates during the first six months of 1999 due to the strengthening weakening of the U.S. Dollar, as compared to the first six months of 1998, 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 11.5%. Volume, as measured by billable hours of branch operations, increased 9.2% in the six month period. All of the Company's major markets experienced revenue increases, as measured in their local
currencies, including the United States (3.7%), France (5.9%) and the United Kingdom (8.9%). The Company's Other Europe and Other Countries segments reported revenue increases, as measured in their local currencies, of 40.1% and 23.9%, respectively. Cost of services, which consists of payroll and related expenses of temporary workers, was 82.6% of revenues in the six months of 1999 compared to 82.8% during the same period in 1998. Gross margins increased in France during the first six months of 1999 due to enhanced pricing. Selling and administrative expenses increased 18.9% to $720.7 million during the first six month period of 1999 primarily due to non-recurring items totaling $28.0 million ($16.4 million after tax) related to employee severances, retirement costs and other associated realignment costs. Excluding these non- recurring items, selling and administrative expenses remain at or below the expense levels of late 1998 despite the Company's continued investments in new or expanding markets. Interest and other expense was $9.9 million in the first six months of 1999 compared to $7.5 million in the first six months of 1998. Net interest expense, plus the cost of the U.S. accounts receivable securitization program in 1999, was $8.3 million and $3.3 million in the first six months of 1999 and 1998, respectively. This increase is primarily due to higher borrowing levels to finance the share repurchase program and the Company's investment in new markets. Translation losses were $900,000 in the first six months of 1999 compared to $2.4 million in the first six months of 1998. The Company had a one-time tax benefit of $15.7 million during the six month period ended June 30, 1999 in connection with the Company's dissolution of a non- operating subsidiary. Exclusive of the effect of the benefit, the Company provided for income taxes at 35.5%, which is equal to the estimated annual effective tax rate based on the currently available information. 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 $.66 in the first six months of 1999 compared to $.58 in the first six months of 1998. Excluding the non-recurring items and one-time income tax gain, net earnings per share on a diluted basis would have been $.67 during the first six months of 1999. The diluted weighted average shares decreased by 3.4% for the first six months due to the Company's treasury stock purchases and a smaller effect of dilutive stock options (see Note 3 to the Consolidated Financial Statements) because of the lower average share price during the first six months. Liquidity and Capital Resources Cash provided by operating activities was $16.2 million in the first six months of 1999 compared to cash used by operating activities of $8.8 million in the first six months of 1998. This change reflects the increased earnings in the first six months of 1999, along with the change in working capital requirements between periods. Cash provided by operating activities before the changes in working capital requirements was $92.1 million in the first six months of 1999 compared to $81.9 million in the first six months of 1998. Cash used by changes in working capital was $75.9 million and $90.7 million in the first six months of 1999 and 1998, respectively. Capital expenditures were $38.7 million in the first six months of 1999 compared to $63.3 million during the first six months of 1998. These expenditures included capitalized software of $1.2 million and $18.6 million in the first six months of 1999 and 1998, 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 $23.1 million and $91.1 million in the first six months of 1999 and 1998, respectively. The additional borrowings in 1999 were primarily used to support the working capital growth and to repurchase the Company's common stock. The Company
repurchased 2.5 million common shares at a cost of $58.2 million during the first six months of 1999. The additional borrowings in 1998 were primarily used to support the working capital growth, investment in new markets and capital expenditures. Accounts receivable decreased to $1,654.1 million at June 30, 1999 from $1,674.7 million at December 31, 1998. This decrease is primarily due to the effect of the change in currency exchange rates during the first six months of 1999 offset by the growth in many of the Company's major markets. The change in exchange rates negatively impacted the receivable balance by $149.5 million. As of June 30, 1999, the Company had borrowings of $139.5 million and letters of credit of $60.0 million outstanding under its $415 million U.S. revolving credit facility, and borrowings of $68.0 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. On July 26, 1999, the Company issued euro200 million in unsecured notes with an effective interest rate of 5.69%, due in July 2006. Net proceeds from the issuance were used to repay amounts outstanding under the Company's unsecured revolving credit agreement and the commercial paper program. 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, 1999, such lines totaled $154.9 million, of which $103.4 million was unused. Year 2000 State of Readiness - In order to address Year 2000 compliance, the Company has initiated a comprehensive project designed to eliminate or minimize any business disruption associated with its information technology ("IT") and non-IT systems. In connection with this project, all significant Company subsidiaries have done systems assessments to determine what modifications will be required and detailed plans and timetables have been developed to complete and test the necessary remediation. Primarily due to changing customer requirements, the Company is in the process of converting and upgrading many of its IT systems, and these new IT systems are Year 2000 compliant. For those IT systems not otherwise being converted or upgraded, remediation efforts have been planned. In the U.S., initial remediation efforts are completed, and testing of this remediation is substantially complete. Any further remediation needed as a result of the testing, and additional testing of the system interfaces, will continue through August of 1999. For all other significant subsidiaries, initial remediation is completed and ongoing testing of the remediation is scheduled to be completed during the third quarter of 1999. The ongoing remediation or replacement of all critical non-IT systems is scheduled to be completed by the third quarter of 1999. The Company presently believes that with these conversions, upgrades and remediation efforts, all significant Year 2000 Issues related to the Company's systems will be addressed. In addition, the Company is contacting significant franchisees, vendors and 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. The Company has sent information to all U.S. and international franchisees regarding the business risks associated with the Year 2000. In addition, the Company contacted all franchisees requesting information regarding their Year 2000 status. The results will be used to assess the Year 2000 operational risks of our franchisees. Despite the Company's diligence, there can be no guarantee that companies that the Company relies upon to conduct its day-to-day business will be compliant.
Costs - To date, the Company has used both external and internal resources for the assessment, remediation and testing of its systems. As of June 30, 1999, approximately $8.4 million has been expensed for external resources. The total expense for external resources is currently estimated to be $10 million to $12 million. Hardware purchases directly related to the project, which are expensed as incurred, have been minimal as of June 30, 1999, and the Company does not expect any remaining hardware purchases to be significant. The cost of internal resources is aggregated with the Company's information technology cost centers. The total cost of the project is not expected to have a material impact on the Company's financial position, results of operations or cash flows. Risks - With respect to the risks associated with its systems, the Company believes that the most reasonably likely worst case scenario is that the Company will experience a number of minor system malfunctions and errors in the early days and weeks of the Year 2000. The Company does not expect these problems to have a material impact on the Company's ability to place and pay workers or invoice customers. With respect to the risks associated with third parties, the Company believes that the most reasonably likely worst case scenario is that some of the Company's franchisees, vendors and customers will not be compliant. Failure by these companies, or any governmental entities, to remediate their systems on a timely basis could have a material adverse effect on the Company. Contingency Plans - The Company is currently preparing to handle the most reasonably likely worst case scenarios described above. The Company is evaluating and developing contingency plans for these risks and is scheduled to have them completed by October of 1999. 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. The Company is currently assessing the impact of the Euro in its business operations in all participating countries. In some countries, the Company has made system modifications to generate dual currency invoices, allowing customers to pay in either the legacy currency or in Euro. To date, the Company has not had significant customer requests for specific invoicing or reporting formats that are not handled by the current systems. However, modifications will be necessary to convert database information to report information in either Euro or in both currencies. Such modifications will occur throughout the transition period and will be coordinated with other system- related upgrades and enhancements. The Company expenses all such system modification costs as incurred. To date, all modification costs have been minimal, and the Company currently does not expect significant costs related to future modifications. 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 except for the issuance of the euro200 million unsecured notes in July 1999 (see the Liquidity and Capital Resource section of the Management Discussion and Analysis for additional information). These notes will be accounted for as a hedge of the Company's net investment in European subsidiaries with Euro functional currencies. Since the Company's net investment in these subsidiaries exceeds the amount of the notes, all translation gains or losses related to the these notes will be recorded as a component of Other comprehensive income.
PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders On April 26, 1999, at the Company's Annual Meeting of Shareholders (the "Annual Meeting") the shareholders of the Company voted to: (1) Elect two directors to serve until 2002 as Class III directors, (2) increase the number of shares authorized for issuance under the 1994 Executive Stock Option and Restricted Stock Plan of Manpower Inc. and (3) ratify the appointment of Arthur Andersen LLP as the Company's independent auditors for 1999. In addition Messrs. Dennis Stevenson and John R. Walter continued as Class I directors (term expiring 2000), and Messrs. J. Ira Harris, Terry A. Hueneke, Newton N. Minow and Gilbert Palay continued as Class II directors (term expiring 2001). 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 Dudley J. Godfrey, Jr. 60,241,162 - 1,537,658 - - b) Election of Marvin B. Goodman 60,761,400 - 1,017,420 - - 2. Increase the number of shares authorized for issuance under the 1994 Executive Stock Option and Restricted Stock Plan 42,293,133 19,230,932 - 254,755 - 3. Ratification of Arthur Andersen LLP as independent auditors 61,550,133 61,970 - 166,717 Item 5 - Other Information On July 26, 1999, the Company issued euro200 million in unsecured notes with an effective interest rate of 5.69%, due in July 2006. The Notes were offered outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended, through a group of managers led by Goldman Sachs International. The Company applied to list the Notes on the Luxembourg Stock Exchange.
Item 6 - Exhibit and Reports on Form 8-K (a) Exhibits 10.1 Stock Option Agreement between Manpower Inc. and John R. Walter dated April 26, 1999. 10.2 Advisory Services Agreement between Manpower, Inc., Ashlin Management Company and John R. Walter dated April 26, 1999. 10.3 Nonstatutory Stock Option Agreement between Manpower Inc. and Mitchell S. Fromstein dated April 26, 1999. 10.4 Agreement between Manpower Inc. and Mitchell S. Fromstein dated April 26, 1999. 27 Financial Data Schedule (b) Reports on Form 8-K The Company filed one current report on Form 8- K on May 3, 1999 with respect to Item 5 - Other Events for the period ended April 26, 1999. The Company filed one current report on Form 8- K on June 28, 1999 with respect to Item 5 - Other Events for the period ended June 25, 1999.
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 16, 1999 /s/ Michael J. Van Handel ---------------------------- Michael J. Van Handel Senior Vice President Chief Financial Officer, Treasurer and Secretary (Signing on behalf of the Registrant and as the Principal Financial Officer and Principal Accounting Officer)