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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934: For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 1-10686
MANPOWER INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1672779
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange on
Title of each class which registered
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of
the registrant was $1,760,868,538 as of February 22, 1999. As of February 22,
1999, there were 79,140,159 of the registrant's shares of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part I and Part II incorporate information by reference to the Annual
Report to Shareholders for the fiscal year ended December 31, 1998. Part III is
incorporated by reference from the Proxy Statement for the Annual Meeting of
Shareholders to be held on April 26, 1999.
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PART I
ITEM 1. BUSINESS
Introduction and History
Manpower Inc. (the "Company") is one of the largest non-governmental
employment services organization in the world,(1) based on systemwide sales,(2)
with almost 3,200 offices in 50 countries. The Company's largest operations,
based on revenues, are located in the United States, France and the United
Kingdom. The Company is primarily engaged in temporary staffing services,
contract services and training and testing of temporary and permanent workers.
The Company provides employment services to a wide variety of customers, none of
which individually comprise a significant portion of revenues within a given
geographic region or for the Company as a whole. Unless the context requires
otherwise, references to the Company include its subsidiaries.
The Company was organized in 1991 as a holding company to acquire
Manpower International Inc. ("Manpower"). Manpower, subsequently renamed
Manpower Wisconsin Inc., was the primary operating subsidiary of the Company
until June 30, 1996, when it was merged into the Company. The predecessor of
Manpower was organized in 1948 and its shares were listed on the New York Stock
Exchange (the "NYSE") in 1962.
The Company's principal executive offices are located at 5301 North
Ironwood Road, Milwaukee, Wisconsin 53217 (telephone: 414-961-1000).
THE COMPANY'S OPERATIONS
United States
In the United States, the Company's operations are carried out through
both branch (i.e., Company-owned) and franchise offices. The Company had 706
branch and 461 franchise offices in the United States at December 31, 1998. The
Company provides a number of central support services to its branches and
franchises which enable it to maintain consistent service quality throughout the
United States regardless of whether an office is a branch or franchise. The
Company has developed a comprehensive system of assessment/selection, training
and quality assurance for its temporary staffing operations. All
assessment/selection, training and support materials are designed and produced
by the Company for both branches and franchises. In addition, the Company
conducts a series of training classes for all employees of both branches and
franchises, including training classes for service representatives and branch
managers, at its Milwaukee headquarters. The Company provides customer invoicing
and payroll processing of its temporary employees for all branch offices and
virtually all franchise offices through its Milwaukee headquarters.
The Company's franchise agreements provide the franchisee with the
right to use the Manpower(R) service mark and associated marks in a specifically
defined exclusive territory. U.S. franchise fees range from 2-3% of franchise
sales. The Company's franchise agreements provide that in the event of a
proposed sale of a franchise to a third party, the Company has the right to
repurchase the franchise at the same price and on the same terms as proposed by
the third party. The Company frequently exercises this right and intends to
continue to do so in the future if opportunities arise with appropriate prices
and terms.
In the United States, the Company's operations are primarily related to
providing temporary employment services. During 1998, approximately 42% of the
Company's United States temporary help revenues were derived from placing office
staff, 39% from placing industrial staff and 19% from placing technical and
information technology staff.
- -------------------
(1) Based on publicly available information, including annual reports to
shareholders, filings with governmental agencies and investment analyst reports.
(2) Systemwide sales of the Company includes total sales of Company-owned
branches and franchises.
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France
The Company is the second largest temporary employment service provider
in France (see footnote 1 on page 1). The Company conducts its operations in
France through over 751 branch offices under the name of Manpower and 36 branch
offices under the name Supplay.
The temporary services market in France is predominately industrial. In
1998, the Company derived approximately 75% of its revenue in France from the
industrial sector, 11% from the construction sector and 14% from the office
sector.
United Kingdom
The Company is the largest supplier of temporary employment services in
the United Kingdom (see footnote 1 on page 1). As of December 31, 1998, it
conducted operations in the United Kingdom through 187 branch offices under the
Manpower brand ("Manpower UK").
Manpower UK uses the same approach to assessment/selection, training
and marketing programs in the United Kingdom as is used in the United States
with such modifications as necessary to reflect differences in language, culture
and business practices. Ultraskill(R), the Company's proprietary program for
assessing the word processing skills of its temporary workers, has received
endorsement from the Royal Society of Arts, one of the world's foremost
qualification standards for office skills. Candidates whose results exceed
prescribed levels can be automatically certified through the RSA. Manpower UK
was the first temporary staffing company to be registered under BS5750-IS09000,
the international quality assurance standard.
Manpower UK offers temporary employment services in the office,
industrial, technical, information technology, nursing and transport markets. It
also offers a variety of specialized services targeted at the health sector and
local government which consist of specialized assessment, selection and
training, as well as the supply of specialized staff. Manpower UK is also the
leading company in the United Kingdom for the provision of managed services,
project work and subcontracted activities.
During 1998, approximately 47% of Manpower UK's revenues were derived
from the supply of office staff, 22% from the supply of industrial staff, 21%
from the supply of technical staff and information technology staff, 5% from the
supply of nursing staff and 5% from the supply of drivers.
The Company also owns Brook Street Bureau PLC which operates separately
from the Manpower brand and exclusively in the United Kingdom. Brook Street
Bureau PLC, acquired in 1985, has a total of 93 branches in England, Scotland
and Wales. It provides services in the office, industrial and catering markets.
In 1998, approximately 91% of its revenues were derived from temporary
placements and 9% were derived from permanent placement. Brook Street Bureau PLC
competes in certain U.K. markets with the Company's Manpower brand. Its
permanent placement business primarily consists of recruitment for office
workers.
Other Europe
The Company operates through 566 branch offices and 54 franchise
offices in other European countries. These operations are located in such
countries as Austria, Belgium, Denmark, Finland, Germany, Italy, The
Netherlands, Norway, Spain and Sweden, all of which are branch offices, and
Switzerland, which is a 49% owned franchise. The Company is the second largest
non-governmental temporary employment services firm in the European Economic
Community (see footnote 1 on page 1). The Company utilizes the same approach to
selection, training, recruiting and marketing techniques in continental Europe
as are used in the United States with such modifications as may be appropriate
for local legal requirements, cultural characteristics and business practices.
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Rest of the World
The Company operates through 295 branch offices and 40 franchise
offices in the other markets of the world. The largest of these operations are
located in Japan (33 branch offices), Israel (56 branch offices), Canada (40
branch offices and 11 franchise offices), Mexico (28 branch offices) and
Australia (65 branch offices). Other significant operations are located in 10
countries in South America and in 7 countries in Southeast Asia. The Company
uses the same general approach to testing, training and marketing tools in other
areas of the world as employed in the United States with such modifications as
may be appropriate for local cultural differences and business practices. In
most of these countries, the Company primarily supplies temporary workers to the
industrial, general office and technical markets.
COMPETITION
Historically, in periods of economic prosperity, the number of firms
operating in the temporary help industry has increased significantly due to the
combination of a favorable economic climate and low barriers to entry.
Recessionary periods, such as that experienced in the United States and United
Kingdom in the early 1990s, result in a reduction in competition through
consolidation and closures. However, historically this reduction has proven to
be of a limited duration as the following periods of economic recovery have led
to a return to growth in the number of competitors operating in the industry.
The temporary employment services market throughout the world is highly
competitive and highly fragmented with more than 15,000 firms competing in the
industry throughout the world. In addition to the Company, the largest publicly
owned companies (the only companies about which financial information is readily
available) specializing in temporary employment services are Adecco, S.A.
(Switzerland), Kelly Services, Inc. (U.S.), The Olsten Corporation (U.S.),
Randstad Holding N.V. (Netherlands), and Vedior/Bis (Netherlands). However,
except for Adecco, S.A. and Vedior/Bis, a substantial majority of the revenues
of these companies are attributable to their home markets. Compared to the
Company, each of them has a more limited network in foreign countries.
In the temporary help industry, competition is limited to firms with
offices located within a customer's particular local market because temporary
employees (aside from certain employees in the technology services segment) are
generally unwilling to travel long distances. In most major markets, competitors
generally include many of the publicly traded companies and numerous regional
and local competitors, some of which may operate only in a single market.
Competition may also be provided by governmental entities or agencies, such as
state employment offices in the United Kingdom and many European countries.
Since client companies rely on temporary employment firms having
offices within the local area in which they operate, competition varies from
market-to-market and country-to-country. In most areas, no single company has a
dominant share of the market. Many client companies use more than one temporary
employment services provider; however, in recent years, the practice of using a
sole (or a limited number of) temporary supplier or a primary supplier has
become an increasingly important factor among the largest customers,
particularly in the United States and the United Kingdom. These sole supplier
relationships can have a significant impact on the Company's revenue and
operating profit growth. A key part of the Company's strategy is to build its
large account business, including sole supplier relationships. While the Company
believes that these large account relationships will prove to be less cyclical
in the long-term than its traditional business, volume reductions by such
customers, whether related to economic factors or otherwise, could have a
material adverse effect on the Company's results in any period.
Methods of Competition
Temporary staffing firms act as intermediaries in matching available
temporary workers to employer assignments. As a result, temporary staffing firms
compete both to recruit and retain a supply of workers and to attract customers
to employ temporary employees. Competition is generally limited to firms having
offices located in a specific local geographic market. Depending on the economy
of a particular market at any point in time, it may be necessary for the Company
to place greater emphasis on recruitment and retention of temporary workers or
marketing
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to customers. The Company recruits temporary workers through a wide variety of
means, principally personal referrals and advertisements and by providing an
attractive compensation package including (in jurisdictions where such benefits
are not otherwise required by law) health insurance, vacation and holiday pay,
incentive plans and a recognition program.
Methods used to market temporary services to customers vary depending
on the customer's perceived need for temporary workers, the local labor supply,
the length of assignment and the number of workers required. Depending on these
factors, the Company competes by means of quality of service provided, scope of
service offered and price. In the temporary help industry, quality is measured
primarily by the ability to effectively match an individual worker to a specific
assignment, as well as the rate of and promptness in filling an order. Success
in providing a high quality service is a function of the ability to access a
large supply of available temporary workers, select suitable individuals for a
particular assignment and, in some cases, train available workers in skills
required for an assignment.
An important aspect in the selection of a temporary worker for an
assignment is the ability of the temporary services firm to identify the skills,
knowledge, abilities, and personal characteristics of a temporary worker and
match their competencies or capabilities to an employer's requirements. The
Company has developed a variety of proprietary programs for identifying and
assessing skill levels of its temporary workers, including Ultraskill(R) (for
word processing skills), Sureskill (for office automation skills such as word
processing, spreadsheet, presentation graphics, etc.), Ultradex (for several
important light industrial skills), Predicta (for critical general office and
customer service/call center skills), Linguaskill (for language skills) and
Phonskill (for verbal communication skills) which are used in selecting a
particular individual for a specific assignment. The Company believes that its
assessment systems enable it to offer a higher quality service by increasing
productivity, decreasing turnover and reducing absenteeism. The Company believes
it is the only temporary employment firm whose employee selection systems have
been statistically validated in full or complete accordance with the guidelines
established by the Equal Employment Opportunity Commission and standards set
forth by the American Psychological Association in the United States and similar
authorities in various other countries. In the United Kingdom, candidates whose
test results on Ultraskill(R) exceed prescribed levels are automatically
certified through the Royal Society of Arts, one of the world's best known
qualification standards for word processing skills.
It is also important to be able to access a large network of skilled
workers and to be able to "create" certain hard-to-find skills by offering
training to available workers. The Company's competitive position is enhanced by
being able to offer a wide variety of skills in some of the most important
market segments for temporary work through the use of training systems.
For the office workers, the Company has a proprietary training system
called Skillware(R) which allows temporary workers to quickly and conveniently
learn new or enhance existing skills in over 50 different word processing,
database, spreadsheet, graphics, desktop publishing, electronic scheduling and
calendaring groupware, project management and operating system applications from
a variety of manufacturers including Microsoft and Lotus. Skillware(R) is a
thorough hands-on program enabling workers to become productive independent
operators. The Skillware(R) system combines the human elements of classroom
instruction with the self-paced work-related aspects of a computer delivered
system. A Skillware(R) administrator sets up the training, monitors all sessions
and is available to answer questions. Every person completing a Skillware(R)
course receives an Operator Support Manual which serves as an on-the-job
reference and refresher. New Skillware(R) is constantly developed or updated as
new software programs are introduced.
The Company also develops Skillware(R) training to prepare workers to
take positions in call centers, banks and other organizations where transaction
processing skills are required. In addition, to assist its temporary workers in
improving general office skills, the Company offers a variety of specific skill
development programs in spelling, punctuation and keyboard skills.
The Company has partnered with CBT Systems to develop TechTrack, a
training program for technical professionals. TechTrack is an interactive,
self-directed training program which enhances technical employees' skills to
meet the current and emerging demands of the business environment. TechTrack
offers a spectrum of instruction
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focusing on client/server, mainframe, internet, networking and operating systems
technologies. The training prepares technical employees for certification
testing by guiding them through Visual Basic, C++ Programming, COBOL, JAVA, SAP,
PowerBuilder, IEEE LAN Architecture and more than 1,000 other courses.
Beginning in 1994 the Company began delivering to all workers, both its
permanent employees and temporary staff, a training program that focuses on
providing exceptional service. Called Putting Quality to Work, this series of
eight independent video programs introduces concepts that will influence
workers' attitudes and behavior, with an emphasis on providing better service to
a company's customers and providing support to co-workers.
Although temporary help firms compete in a local market, for
administrative purposes, the largest customers demand national, and increasingly
global, arrangements. A large national or multi-national customer will
frequently enter into non-exclusive arrangements with several firms, with the
ultimate choice among them being left to its local managers; this effectively
limits competition to the few firms, including the Company, with large branch
networks. National arrangements, which generally fix either the pricing or
mark-up on services performed in a particular country, represented approximately
40% of the Company's sales in 1998. Global arrangements, where the Company
services multinational customers in several countries, represented approximately
10% of the Company's sales in 1998. Because the Company provides services to a
wide variety of customers, there is no one customer that individually comprises
a significant portion of revenues within a given geographic region or for the
Company as a whole.
The Company competes in the large company market by providing permanent
staff training using its Skillware(R) training capability, widespread office
network and large temporary work force, to train the permanent employees of
large companies in a variety of office software applications. In the United
States, 75 of the Fortune 100 companies have used Skillware training for their
permanent staff. The Company believes its capability to offer permanent staff
training, in addition to generating sufficient revenue to offset development
costs, provides it with a key marketing advantage over its competitors in
supplying temporary staff to companies where it has been involved in significant
staff training.
REGULATION
The temporary employment services industry is closely regulated in all
of the major markets in which the Company operates except the United States and
Canada. Temporary employment service firms are generally subject to one or more
of the following types of government regulation: (i) regulation of the
employer/employee relationship between the firm and its temporary employees;
(ii) registration, licensing, record keeping and reporting requirements; and
(iii) substantive limitations on its operations or the use of temporary
employees by customers.
In many markets, the existence or absence of collective bargaining
agreements with labor organizations has a significant impact on the Company's
operations and the ability of customers to use the Company's services. In some
markets, labor agreements are structured on an industry-wide (rather than
company-by-company) basis. Changes in these collective labor agreements have
occurred in the past and are expected to occur in the future and may have a
material impact on the operations of temporary employment services firms,
including the Company.
In many countries, including the United States and the United Kingdom,
temporary employment services firms are considered the legal employers of
temporary workers. Therefore, the firm is governed by laws regulating the
employer/employee relationship, such as tax withholding or reporting, social
security or retirement, anti-discrimination and workers' compensation. In other
countries, temporary employment services firms, while not the direct legal
employer of temporary workers, are still responsible for collecting taxes and
social security deductions and transmitting such amounts to the taxing
authorities.
In many countries, particularly in continental Europe, entry into the
temporary employment market is restricted by the requirement to register with,
or obtain licenses from, a government agency. In addition, a wide variety of
ministerial requirements may be imposed, such as record keeping, written
contracts and reporting. The United States and Canada do not presently have any
form of national registration or licensing requirement.
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In addition to licensing or registration requirements, many countries
impose substantive restrictions on the use of temporary employment services.
Such restrictions include regulations affecting the types of work permitted
(e.g., Germany prohibits the use of temporary workers in construction work and
Japan and Norway generally prohibit the use of temporary workers in industrial
work), the maximum length of a temporary assignment (varying from 3 to 24
months), wage levels (e.g., in France, wages paid to temporary workers must be
the same as paid to permanent workers) or reasons for which temporary workers
may be employed. In some countries special taxes, fees or costs are imposed in
connection with the use of temporary workers. For example, in France, temporary
workers are entitled to a 10% allowance for the precarious nature of employment
which is eliminated if a full-time position is offered to them within three
days. In some countries, the contract of employment with the temporary employee
must differ from the length of assignment.
In the United States, the Company is subject to various federal and
state laws relating to franchising, principally the Federal Trade Commission's
franchise rules and analogous state laws. These laws and related rules and
regulations impose specific disclosure requirements on prospective franchisees.
Virtually all states also regulate the termination of franchises. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Legal Regulations and Union Relationships" which is found in the
Company's 1998 Annual Report to Shareholders and which is incorporated herein by
reference.
TRADEMARKS
The Company maintains a number of trademarks, tradenames, service marks
and other intangible rights. The principal service marks are the Manpower(R)
service mark and logo, Ultraskill(R), Skillware(R) and certain other names and
logos, which are registered in the United States and certain other countries.
The trademark Manpower(R) has been federally registered under United States
Service Mark Registration No. 921701, issued October 5, 1971. Affidavits of use
and incontestability have been filed. The Company renewed this registration for
another ten years on October 5, 1991. The mark Skillware(R) has been federally
registered under United States Trademark Registration No. 1413105, issued
October 14, 1986, and the mark Ultraskill(R) has been federally registered under
United States Trademark Registration No. 1361848, issued September 24, 1985. The
Company plans to file affidavits of use and incontestability at the proper time
and will effect timely renewals, as appropriate, for these and other intangible
rights it maintains. The Company is not currently aware of any infringing uses
which would be likely to substantially and detrimentally affect these rights.
RESEARCH AND DEVELOPMENT
The Company's research and development efforts are concentrated on the
development and updating of its Skillware(R) training and employee selection
programs. Approximately 30 employees are engaged in research and development at
the Company's international headquarters. Independent contractors are also hired
to assist in the development of these tools. Expenditures for research and
development, which were internally financed, aggregated approximately $3.9
million in 1998, approximately $3.5 million in 1997 and approximately $4.3
million in 1996.
EMPLOYEES
The Company had approximately 15,000 permanent full-time employees at
December 31, 1998. In addition, the Company estimates that it assigned over 2.0
million temporary workers on a worldwide basis in 1998. As described above, in
most jurisdictions, the Company (through its subsidiaries), as the employer of
its temporary workers or, as otherwise required by applicable law, is
responsible for employment administration, including collection of withholding
taxes, employer contributions for social security (or its equivalent outside the
United States), unemployment tax, workers' compensation and fidelity and
liability insurance, and other governmental requirements imposed on employers.
In most jurisdictions where such benefits are not legally required, including
the United States, the Company provides health and life insurance, paid holidays
and paid vacations to qualifying temporary employees.
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FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
OPERATIONS AND EXPORT SALES
Note 14 to the Company's Consolidated Financial Statements sets forth
the revenues, earnings before income taxes, identifiable assets and net assets
derived from each geographical area for the years ended December 31, 1998, 1997
and 1996. Such note is found in the Company's 1998 Annual Report to Shareholders
and is incorporated herein by reference.
ITEM 2. PROPERTIES
The Company's international headquarters are in Glendale, Wisconsin, a
suburb of Milwaukee. The Company owns, free of any material encumbrances, an
82,000 square foot building and a 32,000 square foot building situated on a
sixteen-acre site in Glendale, Wisconsin. The Company also owns additional
properties at various other locations which are not material.
Most of the Company's operations are conducted from leased premises,
none of which are material to the Company taken as a whole. The Company does not
anticipate any difficulty in renewing these leases or in finding alternative
sites in the ordinary course of business.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation of a routine nature and various
legal matters which are being defended and handled in the ordinary course of
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
NAME OF OFFICER OFFICE
Mitchell S. Fromstein President and Chief Executive Officer of the
Age 71 Company since January, 1989, and Chairman of the
Board since April, 1989. President and Chief
Executive Officer of Manpower from 1976 until 1996
and a director thereof from 1971 until 1996. A
director of the Company and its predecessors for
more than five years. Also a director of Aramark
Corp.
Terry A. Hueneke Executive Vice President of the Company and a
Age 56 director since December, 1995. Senior Vice
President - Group Executive of Manpower from 1987
until 1996.
Jeffrey A. Joerres Senior Vice President - European Operations and
Age 39 Marketing and Major Account Development since
July, 1998. Senior Vice President - Major Account
Development of the Company from November, 1995 to
July, 1998. Vice President - Marketing and Major
Account Development of the Company from July, 1993
to November, 1995.
Michael J. Van Handel Senior Vice President, Chief Financial Officer,
Age 39 Treasurer and Secretary of the Company since July,
1998. Vice President, Chief Accounting Officer and
Treasurer of the Company from February, 1995 to
July, 1998 and of Manpower from February, 1995 to
June, 1996. Vice President, International
Accounting and Internal Audit of Manpower from
September, 1992 to February, 1995 and Director of
Internal Audit of Manpower prior thereto.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's Common Stock is listed for trading on the New York Stock
Exchange (the "NYSE"), which is the principal exchange for trading in the
Company's shares. The table below sets forth the reported high and low sales
price for shares of the Company's Common Stock on the NYSE during the indicated
quarters based on the NYSE Trading Report:
<TABLE>
<CAPTION>
High Low
---- ---
Fiscal year ended December 31, 1998
<S> <C> <C>
First Quarter.................................................... 42 9/16 33 5/8
Second Quarter................................................... 44 7/8 27 11/16
Third Quarter.................................................... 30 1/8 20
Fourth Quarter................................................... 27 7/16 19 3/8
Fiscal year ended December 31, 1997
First Quarter.................................................... 40 1/2 29 1/2
Second Quarter................................................... 49 35 1/4
Third Quarter.................................................... 50 3/8 37
Fourth Quarter................................................... 40 3/4 35 1/4
</TABLE>
HOLDERS
As of February 22, 1999, 79,140,159 shares of Common Stock were held of
record by 6,583 record holders.
HISTORICAL DIVIDENDS
The Company paid a dividend of $0.09 per share in the second quarter
and $0.10 per share in the fourth quarter of 1998. The Company paid a dividend
of $0.08 per share in the second quarter and $0.09 per share in the fourth
quarter of 1997.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is set forth in the Company's
Annual Report to Shareholders for the fiscal year ended December 31, 1998, under
the heading "Selected Financial Data," (page 35) which information is hereby
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is set forth in the Company's
Annual Report to Shareholders for the fiscal year ended December 31, 1998, under
the heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations," (pages 10 to 17) which information is hereby
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is set forth in the Company's
Annual Report to Shareholders for the fiscal year ended December 31, 1998, under
the heading "Significant Matters Affecting Results of Operations," (pages 13 to
17) which information is hereby incorporated herein by reference.
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Certain information included or incorporated by reference in this
Annual Report on Form 10-K 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 technology developments
- - 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth in the Financial
Statements and the Notes thereto (pages 19 to 35) contained in the Company's
Annual Report to Shareholders for the fiscal year ended December 31, 1998, which
information is hereby incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Executive Officers. Reference is made to "Executive Officers
of the Registrant" in Part I after Item 4.
(b) Directors. The information required by this Item is set forth
in the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 26, 1999 at pages 3 to 4
under the caption "Election of Directors," which information
is hereby incorporated herein by reference.
(c) Section 16 Compliance. The information required by this Item
is set forth in the Company's Proxy Statement for the Annual
Meeting of Shareholders to be held on April 26, 1999 at page
15 under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance," which information is hereby
incorporated herein by reference.
9
<PAGE> 11
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is set forth in the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held on April 26,
1999, at page 5 under the caption "Remuneration of Directors," pages 7 to 10
under the caption "Executive Compensation," and page 13 under the caption
"Executive Compensation Committee Interlocks and Insider Participation," which
information is hereby incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth in the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held on April 26,
1999, at page 2 under the caption "Security Ownership of Certain Beneficial
Owners" and at page 6 under the caption "Security Ownership of Management,"
which information is hereby incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth in the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held on April 26,
1999, at page 5 under the caption "Remuneration of Directors" and at page 13
under the caption "Executive Compensation Committee Interlocks and Insider
Participation," which information is hereby incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements.
<TABLE>
<CAPTION>
PAGE NUMBER(S)
IN ANNUAL REPORT
TO SHAREHOLDERS
------------
Consolidated Financial Statements (data incorporated by reference
from the attached Annual Report to Shareholders):
<S> <C>
Consolidated Balance Sheets as of December 31, 1998 and 1997............... 20-21
Consolidated Statements of Operations for the years ended
December 31, 1998, 1997 and 1996........................................... 19
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996........................................... 22
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1998, 1997 and 1996..................................... 23
Notes to Consolidated Financial Statements................................. 24-35
</TABLE>
(a)(2) Financial Statement Schedules.
Report of Independent Public Accountants on the Financial
Statement Schedule
Consent of Independent Public Accountants
SCHEDULE II - Valuation and Qualifying Accounts
10
<PAGE> 12
(a)(3) Exhibits.
See (c) below.
(b) Reports on Form 8-K.
There were two reports on Form 8-K filed on July 14, 1998 and
November 13, 1998.
(c) Exhibits.
3.1 Articles of Incorporation of Manpower Inc. incorporated by
reference to Annex C of the Prospectus which is contained in
Amendment No. 1 to Form S-4 (Registration No. 33-38684).
3.2 Amended and Restated By-laws of Manpower Inc., incorporated by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
10.1 [Reserved].
10.2 Revolving Credit Agreement dated November 25, 1997, between
Manpower Inc. and the banks set forth therein, Credit Lyonnais,
the First National Bank of Chicago, Fleet National Bank, Mellon
Bank, N.A., Citibank International PLC and Citibank, N.A.,
incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998.
10.3 Amended and Restated Manpower 1991 Executive Stock Option and
Restricted Stock Plan, incorporated by reference to Form 10-Q
of Manpower Inc. dated September 30, 1996.**
10.4 Manpower Savings Related Share Option Scheme, incorporated by
reference to Amendment No. 1 to the Company's Registration
Statement on Form S-4 (Registration No. 33-38684).**
10.5 Transfer Agreement dated February 25, 1991 between Manpower and
the Company (the "Transfer Agreement"), incorporated by
reference to Amendment No. 1 to the Company's Registration
Statement on Form S-4 (Registration No. 33-38684).**
10.6 Blue Arrow Savings Related Share Option Scheme, as assumed by
Manpower pursuant to the Transfer Agreement, incorporated by
reference to Amendment No. 1 to the Company's Registration
Statement on Form S-4 (Registration No. 33-38684).**
10.7 Blue Arrow Executive Share Option Scheme, as assumed by
Manpower pursuant to the Transfer Agreement, incorporated by
reference to Amendment No. 1 to the Company's Registration
Statement on Form S-4 (Registration No. 33-38684).**
10.8 Amended and Restated Manpower 1990 Employee Stock Purchase
Plan, incorporated by reference to the Company's Registration
Statement on Form S-8 (Registration No. 333-31021).**
11
<PAGE> 13
10.9 Manpower Retirement Plan, as amended and restated effective as
of March 1, 1989, incorporated by reference to Form 10-K of
Manpower PLC, SEC File No. 0-9890, filed for the fiscal year
ended October 31, 1989.**
10.10 Amended and Restated Manpower 1994 Executive Stock Option and
Restricted Stock Plan, incorporated by reference to Form 10-Q
of Manpower Inc. dated September 30, 1996.**
10.11(a) Employment Agreement dated September 16, 1987 among Manpower,
Mitchell S. Fromstein and Manpower PLC, incorporated by
reference to the Manpower PLC's registration statement on Form
20-F filed with the Securities and Exchange Commission on March
30, 1988; as amended May 19, 1989, incorporated by reference to
Manpower PLC's Form 10-K, SEC File No. 0-9890, filed for the
fiscal year ended October 31, 1989; and as amended on February
16, 1990 and October 4, 1990, incorporated by reference to
Manpower PLC's Form 10-K, SEC File No. 0-9890, filed for the
fiscal year ended December 31, 1990.**
10.11(b) Amendment dated June 17, 1992 to Employment Agreement dated
September 16, 1987, as amended, among Manpower, Mitchell S.
Fromstein and Manpower PLC, incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.**
10.11(c) Amendment dated March 22, 1994 to Employment Agreement dated
September 16, 1987, as amended, among Manpower, Mitchell S.
Fromstein and Manpower PLC, incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.**
10.12(a) Employment Agreement dated September 16, 1987 among Manpower,
Gilbert Palay and Manpower PLC, incorporated by reference to
Manpower PLC's registration statement on Form 20-F filed with
the Securities and Exchange Commission on May 1, 1989,
incorporated by reference to Manpower PLC's Form 10-K, SEC File
No. 0-9890, filed for the fiscal year ended October 31, 1989;
and as amended on February 16, 1990 and October 4, 1990,
incorporated by reference to Manpower PLC's Form 10-K, SEC File
No. 0-9890, filed for the fiscal year ended December 31,
1990.**
10.12(b) Consulting Agreement dated as of January 1, 1994 between
Manpower Inc. and Gilbert Palay, incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.**
10.13(a) [reserved]
10.13(b) [reserved]
10.14 The Restricted Stock Plan of Manpower Inc., incorporated by
reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.**
10.15 Amended and Restated Manpower 1991 Directors Stock Option Plan,
incorporated by reference to the Company's Registration
Statement on Form S-8 (Registration No. 333-31021).**
12
<PAGE> 14
10.16 Amended and Restated Manpower Deferred Stock Plan, incorporated
by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.**
10.17(a) Employment Agreement between Terry A. Hueneke and Manpower Inc.
dated February 18, 1997, incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.**
10.17(b) Employment Agreement between Terry A. Hueneke and Manpower Inc.
dated February 23, 1998, incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.**
10.18(a) Form of Employment Agreement between Jeffrey A. Joerres and
Manpower Inc. **
10.18(b) Form of Severance Agreement between Jeffrey A.
Joerres and Manpower Inc. **
10.19(a) Form of Employment Agreement between Michael J. Van Handel and
Manpower Inc. **
10.19(b) Form of Severance Agreement between Michael J. Van
Handel and Manpower Inc. **
13 1998 Annual Report to Shareholders. Pursuant to Item
601(b)(13)(ii) of Regulation S-K, any of the portions of the
Annual Report incorporated by reference in this Form 10-K are
filed as an exhibit hereto.
21 Subsidiaries of Manpower Inc.
23 Consent of Arthur Andersen LLP, incorporated by reference to
the Schedule to the Financial Statements, which Schedule is
contained in this Form 10-K.
24 Powers of Attorney.
27 Financial Data Schedule.
** Management contract or compensatory plan or arrangement.
13
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ Mitchell S. Fromstein
--------------------------------
Mitchell S. Fromstein
Chairman of the Board
Date: March 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Mitchell S. Fromstein Chairman, President, Chief Executive March 30, 1999
- --------------------------- Officer and a Director
Mitchell S. Fromstein (Principal Executive Officer)
/s/ Michael J. Van Handel Senior Vice President, Chief Financial Officer, March 30, 1999
- --------------------------- Secretary and Treasurer (Principal Financial Officer
Michael J. Van Handel and Principal Accounting Officer)
</TABLE>
Directors: Dudley J. Godfrey, Jr., Marvin B. Goodman, J. Ira Harris, Terry A.
Hueneke, Newton N. Minow, Gilbert Palay, John R. Walter and Dennis
Stevenson
By: /s/ Michael J. Van Handel March 30, 1999
--------------------------
Michael J. Van Handel
Attorney-In-Fact*
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith.
14
<PAGE> 16
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
and Shareholders of Manpower Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Manpower Inc.'s annual report to
shareholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 29, 1999. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in
the index at item 14(a)(2) is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 29, 1999.
--------------------
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Annual Report on Form 10-K of Manpower Inc.
of our report dated January 29, 1999, included in the 1998 Annual Report to
Shareholders of Manpower Inc.
We also consent to the incorporation of our reports included (or
incorporated by reference) in this Annual Report on Form 10-K, into the
Company's previously filed Registration Statements on Form S-8 (File Nos.
33-40441, 33-51336, 33-55264, 33-84736, 333-1040 and 333-31021), the Company's
Registration Statements on Form S-3 (File Nos. 33-89660 and 333-6545) and the
Company's Registration Statements on Form S-4 (File Nos. 333-650 and 33-95896).
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
March 29, 1999.
<PAGE> 17
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1998, 1997, and 1996, in
thousands:
Allowance for Doubtful Accounts:
<TABLE>
<CAPTION>
BALANCE AT PROVISIONS BALANCE AT
BEGINNING TRANSLATION CHARGED TO RECLASSIFICATIONS END OF
OF YEAR ADJUSTMENTS EARNINGS WRITE-OFFS AND OTHER YEAR
------- ----------- -------- ---------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1998............ $38,019 986 11,986 (11,469) (18) $39,504
Year ended December 31, 1997............ $33,526 (2,179) 15,884 (10,108) 896 $38,019
Year ended December 31, 1996............ $32,901 (412) 12,360 (11,686) 363 $33,526
</TABLE>
<PAGE> 1
Manpower Inc.
5301 North Ironwood Road
Milwaukee, Wisconsin 53217
February 22, 1999
Mr. Jeffrey Joerres:
We have agreed as follows with respect to the compensation to be paid
and the other benefits to be provided to you in connection with your continuing
employment by Manpower Inc. (the "Corporation"):
1. Term. The term of this agreement (the "Term") will begin on the date
of this letter indicated above and end on the first to occur of the following:
(a) the date two years after the occurrence of a Change of Control, as defined
in the letter to you of even date regarding other rights and obligations on
termination of your employment; (b) January 31, 2002, if no Change of Control
occurs between the date of this letter indicated above and January 31, 2002; or
(c) the Date of Termination, as defined in the letter from the Corporation to
you of even date regarding other rights and obligations on termination of your
employment.
2. Base Compensation. You will be paid a base salary for your services
during the Term equal to Three Hundred Thousand Dollars ($300,000) per year, as
may be increased from time to time by the Corporation. Your base compensation
will be paid in accordance with the Corporation's regular payroll practices with
respect to such compensation as in effect from time to time.
3. Incentive Bonus. You also will be entitled to receive an incentive
bonus for each full or partial fiscal year of the Corporation included within
the Term. It is intended that the amount of this incentive bonus will be
determined annually based upon objective criteria established at the beginning
of each fiscal year, but until such criteria are established the amount will be
determined by the Executive Compensation Committee of the Corporation, subject
to ratification by the Board of Directors, in its sole discretion. This
incentive bonus will be paid within 45 days after the close of each such fiscal
year.
4. Benefits. During the entire Term, the Corporation will provide you
with, and you will be eligible for, all benefits of employment generally made
available to the senior executives of the Corporation from time to time
(collectively, the "Benefits Plans"), subject to and on a basis
<PAGE> 2
consistent with the terms, conditions and overall administration of such Benefit
Plans. You will be considered for participation in Benefit Plans which by the
terms thereof are discretionary in nature (such as stock option plans) on the
same basis as other executive personnel of the Corporation of similar rank. You
also will be entitled to vacations and perquisites in accordance with the
Corporation's policies as in effect from time to time for senior executives of
the Corporation.
5. Expenses. The Corporation will reimburse to you on a monthly basis
for all traveling, hotel, entertainment and other expenses reasonably incurred
by you in the proper performance of your duties during the Term, subject to your
compliance with the guidelines and regulations concerning expense reimbursement
issued by the Corporation.
6. Nondisclosure and Nonsolicitation.
(a) Nondisclosure.
(i) You will not, directly or indirectly, at any time
during the term of your employment with the Corporation or any
of its direct or indirect subsidiaries (collectively, the
"Manpower Group") or during the two-year period following your
termination of employment with the Manpower Group, use for
yourself or others, or disclose to others, any Confidential
Information (as defined below), whether or not conceived,
developed, or perfected by you and no matter how it became
known to you, unless (a) you first secure written consent of
the Corporation to such disclosure or use, (b) the same shall
have lawfully become a matter of public knowledge other than
by your act or omission, or (c) you are ordered to disclose
the same by a court of competent jurisdiction or are otherwise
required to disclose the same by law, and you promptly notify
the Corporation of such disclosure. "Confidential Information"
shall mean all business information (whether or not in written
form) which relates to any company in the Manpower Group and
which is not known to the public generally (absent your
disclosure), including but not limited to confidential
knowledge, operating instructions, training materials and
systems, customer lists, sales records and documents,
marketing and sales strategies and plans, market surveys, cost
and profitability analyses, pricing information, competitive
strategies, personnel-related information, and supplier lists.
This obligation will survive the termination of your
employment for a period of two years and will not be construed
to in any way limit the Corporation's rights to protect
confidential information which constitute trade secrets under
applicable trade secrets law even after such two-year period.
(ii) Upon your termination of employment with the
Manpower Group, or at any other time upon request of the
Corporation, you will promptly surrender to the Corporation,
or destroy and certify such destruction to the Corporation,
any documents, materials, or computer or electronic records
containing any Confidential Information which are in your
possession or under your control.
2
<PAGE> 3
(b) Nonsolicitation of Employees. You agree that you will not,
at any time during the term of your employment with the Manpower Group
or during the one-year period following your termination of employment
with the Manpower Group, either on your own account or in conjunction
with or on behalf of any other person, company, business entity, or
other organization whatsoever, directly or indirectly induce, solicit,
entice or procure any person who is an employee of any company in the
Manpower Group, or has been such an employee within the three months
preceding such action, to terminate his or her employment with the
Manpower Group so as to accept employment elsewhere.
(c) Injunction. You recognize that irreparable and
incalculable injury will result to the Manpower Group and its
businesses and properties in the event of your breach of any of the
restrictions imposed by Sections 6(a) - (b), above. You therefore agree
that, in the event of any such actual, impending or threatened breach,
the Corporation will be entitled, in addition to any other remedies and
damages available to it, to temporary and permanent injunctive relief
(without the necessity of posting a bond or other security) restraining
the violation, or further violation, of such restrictions by you and by
any other person or entity from whom you may be acting or who is acting
for you or in concert with you.
7. Successors; Binding Agreement. This letter agreement will be binding
on the Corporation and its successors and will inure to the benefit of and be
enforceable by your personal or legal representatives, heirs and successors.
8. Notice. Notices and all other communications provided for in this
letter will be in writing and will be deemed to have been duly given when
delivered in person, sent by telecopy, or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, and properly
addressed to the other party.
9. No Right to Remain Employed. Nothing contained in this letter will
be construed as conferring upon you any right to remain employed by the
Corporation or any member of the Manpower Group or affect the right of the
Corporation or any member of the Manpower Group to terminate your employment at
any time for any reason or no reason, subject to the obligations of the
Corporation and the Manpower Group as set forth herein.
10. Modification. No provision of this letter may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing by you and the Corporation.
11. Withholding. The Corporation shall be entitled to withhold from
amounts to be paid to you hereunder any federal, state, or local withholding or
other taxes or charges which it is, from time to time, required to withhold
under applicable law.
12. Previous Agreement. This letter and the letter of even date from
the Corporation to you, regarding other rights and obligations on termination of
your employment, upon acceptance
3
<PAGE> 4
by you, expressly supersede any and all previous agreements or understandings
relating to your employment by the Corporation or the Manpower Group or the
termination of such employment, and any such agreement or agreements shall, as
of the date of your acceptance, have no further force or effect.
If you are in agreement with the foregoing, please sign and return one
copy of this letter which will constitute our agreement with respect to the
subject matter of this letter.
Sincerely,
MANPOWER INC.
By:
--------------------------------
Agreed as of the 22nd day of February, 1999.
- --------------------------------------------
Jeffrey Joerres
4
<PAGE> 1
EXHIBIT 10.18(b)
Manpower Inc.
5301 North Ironwood Road
Milwaukee, Wisconsin 53217
February 22, 1999
Mr. Jeffrey Joerres:
Manpower Inc. (the "Corporation") desires to retain experienced,
well-qualified executives, like you, to assure the continued growth and success
of the Corporation and its direct and indirect subsidiaries (collectively, the
"Manpower Group"). Accordingly, as an inducement for you to continue your
employment in order to assure the continued availability of your services to the
Manpower Group, we have agreed as follows:
1. Definitions. For purposes of this letter:
(a) Cause. Termination by the Corporation of your employment with the
Corporation for "Cause" will mean termination upon (i) your
willful and continued failure to substantially perform your duties
with the Manpower Group after a written demand for substantial
performance is delivered to you that specifically identifies the
manner in which the Corporation believes that you have not
substantially performed your duties, and you have failed to resume
substantial performance of your duties on a continuous basis
within ten days after receiving such demand, (ii) your commission
of any material act of dishonesty or disloyalty involving the
Manpower Group, (iii) your chronic absence from work other than by
reason of a serious health condition, (iv) your commission of a
crime which substantially relates to the circumstances of your
position with the Manpower Group or which has material adverse
effect on the business of the Manpower Group, or (v) the willful
engaging by you in conduct which is demonstrably and materially
injurious to the Manpower Group. For purposes of this Subsection
1(a), no act, or failure to act, on your part will be deemed
"willful" unless done, or omitted to be done, by you not in good
faith.
(b) Change of Control. A "Change of Control" will mean the first to
occur of the following:
(i) the acquisition (other than from the Corporation), by any
person, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities
<PAGE> 2
Exchange Act of 1934 (the "Exchange Act")), directly or
indirectly, of beneficial ownership (within the meaning of
Exchange Act Rule 13d-3) of more than 50% of the then
outstanding shares of common stock of the Corporation or
voting securities representing more than 50% of the combined
voting power of the Corporation's then outstanding voting
securities entitled to vote generally in the election of
directors; provided, however, no Change of Control shall be
deemed to have occurred as a result of an acquisition of
shares of common stock or voting securities of the
Corporation (A) by the Corporation, any of its subsidiaries,
or any employee benefit plan (or related trust) sponsored or
maintained by the Corporation or any of its subsidiaries or
(B) by any other corporation or other entity with respect to
which, following such acquisition, more than 60% of the
outstanding shares of the common stock, and voting
securities representing more than 60% of the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, of such other
corporation or entity are then beneficially owned, directly
or indirectly, by the persons who were the Corporation's
shareholders immediately prior to such acquisition in
substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Corporation's
then outstanding common stock or then outstanding voting
securities, as the case may be; or
(ii) any merger or consolidation of the Corporation with any
other corporation, other than a merger or consolidation
which results in more than 60% of the outstanding shares of
the common stock, and voting securities representing more
than 60% of the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, of the surviving or consolidated
corporation being then beneficially owned, directly or
indirectly, by the persons who were the Corporation's
shareholders immediately prior to such acquisition in
substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Corporation's
then outstanding common stock or then outstanding voting
securities, as the case may be; or
(iii) any liquidation or dissolution of the Corporation or the
sale or other disposition of all or substantially all of the
assets of the Corporation; or
(iv) individuals who, as of the date of this letter, constitute
the Board of Directors of the Corporation (as of such date,
the "Incumbent Board") cease for any reason to constitute at
least a majority of such Board; provided, however, that any
person becoming a director subsequent to the date of this
letter whose election, or nomination for election by the
shareholders of the Corporation, was approved by at least a
majority of the directors then comprising the Incumbent
Board shall be, for purposes of this letter, considered as
though such person were a member of the
2
<PAGE> 3
Incumbent Board but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest which was
(or, if threatened, would have been) subject to Exchange Act
Rule 14a-11; or
(v) the Corporation shall enter into any agreement (whether or
not conditioned on shareholder approval) providing for or
contemplating, or the Board of Directors of the Corporation
shall approve and recommend that the shareholders of the
Corporation accept, or approve or adopt, or the shareholders
of the Corporation shall approve, any acquisition that would
be a Change of Control under clause (i), above, or a merger
or consolidation that would be a Change of Control under
clause (ii), above, or a liquidation or dissolution of the
Corporation or the sale or other disposition of all or
substantially all of the assets of the Corporation; or
(vi) whether or not conditioned on shareholder approval, the
issuance by the Corporation of common stock of the
Corporation representing a majority of the outstanding
common stock, or voting securities representing a majority
of the combined voting power of the outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors, after giving effect to such
transaction.
Following the occurrence of an event which is not a Change of Control whereby
there is a successor holding company to the Corporation, or, if there is no such
successor, whereby the Corporation is not the surviving corporation in a merger
or consolidation, the surviving corporation or successor holding company (as the
case may be), for purposes of this definition, shall thereafter be referred to
as the Corporation.
(c) Good Reason. "Good Reason" will mean, without your consent, the
occurrence of any one or more of the following during the Term:
(i) the assignment to you of a position which represents a
material reduction from your current position of Senior Vice
President - Marketing and Major Account Development and
Senior Vice President - European Operations, or the
assignment to you of duties, other than incidental duties,
inconsistent with your current position or such other
position, provided you object to such assignment by written
notice to the Corporation within twenty (20) business days
after it is made and the Corporation fails to cure, if
necessary, within ten (10) business days after such notice
is given;
(ii) any material violation of this agreement or of Sections 2
through 5 of the Compensation Agreement by the Corporation
which remains uncured ten (10) business days after you give
written notice to the Corporation which specifies the
violation;
3
<PAGE> 4
(iii) being required by the Corporation to change the location of
your principal office to one in excess of seventy-five (75)
miles from the Corporation's home office in Glendale,
Wisconsin, provided your employment with the Manpower Group
is terminated within ninety (90) days after any such change
of location; or
(iv) any reduction in the amount of incentive bonus received by
you for a given fiscal year during the Term within two years
after the occurrence of a Change of Control, as compared to
the amount of the incentive bonus received by you for the
fiscal year immediately preceding the fiscal year in which a
Change of Control occurred, unless the incentive bonus for
such given fiscal year is based on the same objective
criteria as applied in the prior fiscal year or other
objective criteria to which you have agreed.
Your continued employment or failure to give Notice of Termination
will not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder except as
otherwise provided.
(d) Notice of Termination. Any termination of your employment by the
Corporation, or termination by you for Good Reason during the Term
will be communicated by Notice of Termination to the other party
hereto. A "Notice of Termination" will mean a written notice which
specifies a Date of Termination (which date shall be on or after
the date of the Notice of Termination) and, if applicable,
indicates the provision in this letter applying to the termination
and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment
under the provision so indicated.
(e) Date of Termination. "Date of Termination" will mean the date
specified in the Notice of Termination where required (which date
shall be on or after the date of the Notice of Termination) or in
any other case upon your ceasing to perform services for the
Manpower Group.
(f) Term. The "Term" will be a period beginning on the date of this
letter indicated above and ending on the first to occur of the
following: (a) the date two years after the occurrence of a Change
of Control; (b) January 31, 2002, if no Change of Control occurs
between the date of this letter indicated above and January 31,
2002; and (c) the Date of Termination.
(g) Benefit Plans. "Benefit Plans" means all benefits of employment
generally made available to the senior executives of the
Corporation from time to time.
(h) Compensation Agreement. The "Compensation Agreement" means the
letter of even date from the Corporation to you, as accepted by
you, regarding your compensation and benefits.
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<PAGE> 5
2. Compensation and Benefits on Termination.
(a) Termination by the Corporation for Cause or by You Other Than for
Good Reason. If your employment with the Manpower Group is
terminated by the Corporation for Cause or by you other than for
Good Reason, the Corporation will pay you or provide you with (a)
your full base salary as then in effect through the Date of
Termination, (b) your unpaid incentive bonus, if any, attributable
to any complete fiscal year of the Corporation ended before the
Date of Termination (but no incentive bonus will be payable for
the fiscal year in which termination occurs, notwithstanding the
terms of the Compensation Agreement), and (c) all benefits to
which you are entitled under any Benefit Plans in accordance with
the terms of such plans. The Manpower Group will have no further
obligations to you.
(b) Termination of Reason of Disability or Death. If your employment
with the Manpower Group terminates during the Term by reason of
your disability or death, the Corporation will pay you or provide
you with (a) your full base salary as then in effect through the
Date of Termination, (b) all benefits to which you are entitled
under any Benefit Plans in accordance with the terms of such
plans, (c) your unpaid incentive bonus, if any, attributable to
any complete fiscal year of the Corporation ended before the Date
of Termination, and (d) as the incentive bonus for the year in
which termination occurs to be paid pursuant to the Compensation
Agreement, an amount equal to the amount determined based on the
applicable objective criteria for the full year in which the Date
of Termination occurs (or alternatively your annual incentive
bonus for the fiscal year of the Corporation immediately preceding
the Date of Termination if the incentive bonus for the year in
which the Date of Termination occurs would have been determined on
a discretionary basis), prorated for the actual number of days you
were employed by the Manpower Group during the fiscal year in
which the Date of Termination occurs, payable within 45 days after
the close of such fiscal year. The Corporation shall be entitled
to terminate your employment by reason of your disability if you
become disabled and entitled to benefits under the terms of the
long-term disability plan of the Corporation. The Manpower Group
will have no further obligations to you.
(c) Termination for Any Other Reason.
(i) If, during the Term and within two years after the
occurrence of a Change of Control, your employment with the
Manpower Group is terminated for any reason not specified in
Subsection 2(a) or (b), above, you will be entitled to the
following:
(A) the Corporation will pay you your full base salary
through the Date of Termination at the rate in effect
at the time Notice of Termination is given;
5
<PAGE> 6
(B) the Corporation will pay you your unpaid incentive
bonus, if any, attributable to any complete fiscal year
of the Corporation ended before the Date of
Termination;
(C) as the incentive bonus for the year in which
termination occurs to be paid under the Compensation
Agreement, the Corporation will pay you an amount equal
to the amount which would have been payable to you had
your employment not terminated (which shall be
determined based on the objective criteria for the full
fiscal year in which the Date of Termination occurs, if
applicable, but which shall not be less than the
largest annual incentive bonus awarded to you for the
three fiscal years of the Corporation immediately
preceding the Date of Termination unless such incentive
bonus for the year during which the Date of Termination
occurs is determined on the basis of objective criteria
which also applied in the prior fiscal year or to which
you have agreed), prorated for the actual number of
days you were employed by the Manpower Group during the
year in which the termination occurs, payable within 45
days after the close of such fiscal year unless
objective criteria for such bonus will not be relevant;
(D) the Corporation will pay as a severance benefit to you
a lump-sum payment equal to two and a half times the
sum of (i) your annual base salary in effect at the
time Notice of Termination is given and (ii) the amount
of your largest incentive bonus for the three fiscal
years of the Corporation immediately preceding the Date
of Termination or, if greater, the incentive bonus for
the fiscal year during which the Date of Termination
occurs (determined as provided in Subsection
2(c)(i)(C), above); and
(E) for an eighteen-month period after the Date of
Termination, the Corporation will arrange to provide
you and your eligible dependents, at the Corporation's
expense, with benefits under the medical, dental, life,
and disability plans of the Manpower Group, or benefits
substantially similar to the benefits you were
receiving during the 90-day period immediately prior to
the time Notice of Termination is given under the named
plans; provided, however, that benefits otherwise
receivable by you pursuant to this Subsection
2(c)(i)(E) will be reduced to the extent other
comparable benefits are actually received by you during
the eighteen-month period following your termination,
and any such benefits actually received by you will be
reported to the Corporation; provided, further that any
insurance continuation coverage that you may be
entitled to receive under the Consolidated
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<PAGE> 7
Omnibus Budget Reconciliation Act of 1986 ("COBRA")
will commence on the Date of Termination.
(ii) If your employment with the Manpower Group is terminated
during the Term for any reason not specified in Subsection
2(a) or (b), above, and Subsection 2(c)(i) does not apply to
the termination, you will be entitled to the following:
(A) the Corporation will pay you your full base salary
through the Date of Termination at the rate then in
effect;
(B) the Corporation will pay you your unpaid incentive
bonus, if any, attributable to any complete fiscal year
of the Corporation ended before the Date of
Termination;
(C) as the incentive bonus for the year in which
termination occurs to be paid pursuant to the
Compensation Agreement, the Corporation will pay you an
amount equal to the amount which would have been
payable to you had your employment not terminated
(which shall be determined based on the objective
criteria for the full fiscal year in which the Date of
Termination occurs, if applicable, but which shall not
be less than the largest annual incentive bonus awarded
to you for the three fiscal years of the Corporation
immediately preceding the Date of Termination unless
such incentive bonus for the year during which the Date
of Termination occurs is determined on the basis of
objective criteria which also applied in the prior
fiscal year or to which you have agreed), prorated for
the actual number of days you were employed by the
Manpower Group during the fiscal year in which the Date
of Termination occurs, payable within 45 days after the
close of such fiscal year unless objective criteria for
such bonus will not be relevant;
(D) the Corporation will pay as a severance benefit to you
a lump-sum payment equal to the amount of your annual
base salary as then in effect plus an amount equal to
your largest annual incentive bonus for the three
fiscal years of the Corporation immediately preceding
the Date of Termination or, if greater, the incentive
bonus for the fiscal year during which the Date of
Termination occurs (determined as provided in
Subsection 2(c)(ii)(C), above); and
(E) for the twelve-month period after the Date of
Termination, you and your eligible dependents will
continue to receive benefits under the medical and
dental plans of the Corporation as if your employment
by the Corporation did not terminate; provided, that
the payments
7
<PAGE> 8
or benefits otherwise receivable by you pursuant to
this Subsection 2(c)(ii)(E) will be reduced to the
extent other comparable payments or benefits are
actually received by you during the twelve-month period
following your termination, and any such payments or
benefits actually received by you will be reported to
the Corporation; and provided, further that any
insurance continuation coverage that you may be
entitled to receive under the Consolidated Omnibus
Budget Reconciliation Act of 1986 or similar state laws
will commence on the Date of Termination;
The amounts paid to you pursuant to Subsection 2(c)(i)(D) or
2(C)(ii)(D) will not be included as compensation for purposes of any
qualified or nonqualified pension or welfare benefit plan of the
Manpower Group.
(d) Golden Parachute Tax.
(i) Notwithstanding anything contained in this letter to the
contrary, in the event that any payment or distribution to
or for your benefit pursuant to the terms of this letter (a
"Payment" or "Payments") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties
are incurred by you with respect to such excise tax (such
excise tax, together with any interest and penalties, are
collectively referred to as the "Excise Tax"), then you
shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by
you of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, you retain an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(ii) A determination shall be made as to whether and when a
Gross-Up Payment is required pursuant to this Subsection
2(d) and the amount of such Gross-Up Payment, such
determination to be made within fifteen business days of the
Date of Termination, or such other time as requested by the
Corporation or by you (provided you reasonably believe that
any of the Payments may be subject to the Excise Tax). Such
determination shall be made by a national independent
accounting firm selected by you (the "Accounting Firm"). All
fees, costs and expenses (including, but not limited to, the
cost of retaining experts) of the Accounting Firm shall be
borne by the Corporation and the Corporation shall pay such
fees, costs and expenses as they become due. The Accounting
Firm shall provide detailed supporting calculations,
acceptable to you, both to the Corporation and you. The
Gross-Up Payment, if any, as determined pursuant to this
Subsection
8
<PAGE> 9
2(d)(ii) shall be paid by the Corporation to you within five
business days of the receipt of the Accounting Firm's
determination. Any such initial determination by the
Accounting Firm of whether or when a Gross-Up Payment is
required and, if such a payment is required, the amount
thereof shall be binding upon the Corporation and you
subject to the application of Subsection 2(d)(iii).
(iii) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a
Gross-Up Payment (or a portion thereof) will be paid which
should not have been paid (an "Overpayment") or a Gross-Up
Payment (or a portion thereof) which should have been paid
will not have been paid (an "Underpayment"). An Underpayment
shall be deemed to have occurred upon notice (formal or
informal) to you from any governmental taxing authority that
your tax liability (whether in respect of your then current
taxable year or in respect of any prior taxable year) may be
increased by reason of the imposition of the Excise Tax on a
Payment or Payments with respect to which the Corporation
has failed to make a sufficient Gross-Up Payment. An
Overpayment shall be deemed to have occurred upon a "Final
Determination" (as hereinafter defined) that the Excise Tax
shall not be imposed upon a Payment or Payments with respect
to which you had previously received a Gross-Up Payment. A
Final Determination shall be deemed to have occurred when
you have received from the applicable governmental taxing
authority a refund of taxes or other reduction in your tax
liability by reason of the Overpayment and upon either (A)
the date a determination is made by, or an agreement is
entered into with, the applicable governmental taxing
authority which finally and conclusively binds you and such
taxing authority, or in the event that a claim is brought
before a court of competent jurisdiction, the date upon
which a final determination has been made by such court and
either all appeals have been taken and finally resolved or
the time for all appeals has expired or (B) the expiration
of the statute of limitations with your applicable tax
return. If an Underpayment occurs, you shall promptly notify
the Corporation and the Corporation shall pay to you at
least five business days prior to the date on which the
applicable governmental taxing authority has requested
payment, an additional Gross-Up Payment equal to the amount
of the Underpayment plus any interest and penalties imposed
on the Underpayment. If an Overpayment occurs, the amount of
the Overpayment shall be treated as a loan by the
Corporation to you and you shall, within ten business days
of the occurrence of such Overpayment, pay to the
Corporation the amount of the Overpayment plus interest at
an annual rate equal to the rate provided for in Section
1274(b)(2)(B) of the Code from the date the Gross-Up Payment
(to which the Overpayment relates) was paid to you.
9
<PAGE> 10
(iv) Notwithstanding anything contained in this letter to the
contrary, in the event it is determined that an Excise Tax
will be imposed on any Payment or Payments, the Corporation
shall pay to the applicable governmental taxing authorities
as Excise Tax withholding, the amount of the Excise Tax that
the Corporation has actually withheld from the Payment or
Payments.
(e) Payment. The payments provided for in Subsections 2(c)(i)(A)
through (D) or 2(c)(ii)(A) through (D), above, will be made not
later than the fifteenth business day following the Date of
Termination, except as otherwise provided. If any of such payments
is not made when due (hereinafter a "Delinquent Payment"), in
addition to such principal sum, the Corporation will pay you
interest on any and all such Delinquent Payments from the date due
computed at the prime rate as announced from time to time by
Firstar Bank of Milwaukee, compounded monthly.
(f) No Mitigation. You will not be required to mitigate the amount of
any payment or benefit provided for in this Section 2 by seeking
other employment or otherwise, nor will the amount of any payment
provided for in this Section 2, unless otherwise provided herein,
be reduced by any compensation earned by you as the result of
employment by another employer after the Date of Termination, or
otherwise.
(g) Release of Claims. Notwithstanding the foregoing, the Corporation
will not pay you, and you have no right to receive, any benefit
described in Section 2, above, unless and until you execute, and
there shall be effective following any statutory period for
revocation, a release, in a form reasonably acceptable to the
Corporation, that irrevocably and unconditionally releases,
waives, and fully and forever discharges the Manpower Group and
its past and current directors, officers, employees, and agents
from and against any and all claims, liabilities, obligations,
covenants, rights, demands and damages of any nature whatsoever,
whether known or unknown, anticipated or unanticipated, relating
to or arising out of your employment with the Manpower Group,
including without limitation claims arising under the Age
Discrimination in Employment Act of 1967, as amended, Title VII of
the Civil Rights Act of 1964, as amended, the Civil Rights Act of
1991, the Equal Pay Act, as amended, and any other federal, state,
or local law or regulation.
(h) Forfeiture. Notwithstanding the foregoing, your right to receive
the payments and benefits to be provided to you under this Section
2 beyond those described in Subsection 2(a), above, is conditioned
upon your performance of the obligations stated in Section 3,
below, and in Section 6 of the Compensation Agreement, and upon
your breach of any such obligations, you will immediately return
to the Corporation the amount of such payments and benefits and
you will no longer have any right to receive any such payments or
benefits.
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<PAGE> 11
3. Noncompetition Agreement.
(a) Noncompetition. During the term of your employment with the
Manpower Group, you will not assist any competitor of any company
in the Manpower Group in any capacity. During the one-year period
which immediately follows the termination of your employment with
the Manpower Group:
(i) You will not, directly or indirectly, contact any customer
or prospective customer of the Corporation with whom you
have had contact on behalf of the Corporation during the
two-year period preceding the date of such termination or
any customer or prospective customer about whom you obtained
confidential information in connection with your employment
by the Corporation during such two-year period so as to
cause or attempt to cause such customer or prospective
customer of the Corporation not to do business or to reduce
such customer's business with the Corporation or divert any
business from the Corporation.
(ii) You will not, directly or indirectly, provide services or
assistance of a nature similar to the services provided to
the Manpower Group during the term of your employment with
the Manpower Group, to any entity engaged in the business of
providing temporary staffing services anywhere in the United
States or any other country in which the Manpower Group
conducts business as of the Date of Termination which has,
together with its affiliated entities, annual revenues from
such business in excess of $500,000,000. You acknowledge
that the scope of this limitation is reasonable in that,
among other things, providing any such services or
assistance during such one-year period would permit you to
use unfairly your close identification with the Manpower
Group and the customer contacts you developed while employed
by the Manpower Group and would involve the use and
disclosure of confidential information pertaining to the
Manpower Group.
(b) Injunction. You recognize that irreparable and incalculable injury
will result to the Manpower Group and its businesses and
properties in the event of your breach of any of the restrictions
imposed by Subsection 3(a), above. You therefore agree that, in
the event of any such actual, impending or threatened breach, the
Corporation will be entitled, in addition to the remedies set
forth in Subsection 2(h), above, and any other remedies and
damages, to temporary and permanent injunctive relief (without the
necessity of posting a bond or other security) restraining the
violation, or further violation, of such restrictions by you and
by any other person or entity from whom you may be acting or who
is acting for you or in concert with you.
11
<PAGE> 12
(c) Nonapplication. Notwithstanding the above, this Section 3 will not
apply if your employment with the Corporation is terminated by you
for Good Reason or by the Corporation without Cause within two
years after the occurrence of a Change of Control.
4. Nondisparagement. Upon your termination of employment with the Manpower
Group for any reason, the Manpower Group agrees to maintain a positive
and constructive attitude and demeanor toward you, and agrees to
refrain from making any derogatory comments or statements of a negative
nature about you. Upon your termination of employment with the Manpower
Group for any reason, you agree to maintain a positive and constructive
attitude and demeanor toward the Manpower Group, and agree to refrain
from making derogatory comments or statements of a negative nature
about the Manpower Group, its officers, directors, shareholders,
agents, partners, representatives and employees, to anyone.
5. Successors; Binding Agreement. This letter agreement will be binding on
the Corporation and its successors and will inure to the benefit of and
be enforceable by your personal or legal representatives, heirs and
successors.
6. Notice. Notices and all other communications provided for in this
letter will be in writing and will be deemed to have been duly given
when delivered in person, sent by telecopy, or mailed by United States
registered or certified mail, return receipt requested, postage
prepaid, and properly addressed to the other party.
7. No Right to Remain Employed. Nothing contained in this letter will be
construed as conferring upon you any right to remain employed by the
Corporation or any member of the Manpower Group or affect the right of
the Corporation or any member of the Manpower Group to terminate your
employment at any time for any reason or no reason, subject to the
obligations of the Corporation and the Manpower Group as set forth
herein.
8. Modification. No provision of this letter may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to
in writing by you and the Corporation.
9. Withholding. The Corporation shall be entitled to withhold from amounts
to be paid to you hereunder any federal, state, or local withholding or
other taxes or charges which it is, from time to time, required to
withhold under applicable law.
10. Previous Agreement. This letter, upon acceptance by you, and the
Compensation Agreement expressly supersede any and all previous
agreements or understandings relating to your employment by the
Corporation or the Manpower Group or the termination of such
employment, and any such agreement or agreements shall, as of the date
of your acceptance, have no further force or effect.
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<PAGE> 13
If you are in agreement with the foregoing, please sign and return one
copy of this letter which will constitute our agreement with respect to the
subject matter of this letter.
Sincerely,
MANPOWER INC.
By:
---------------------------------
Agreed as of the 22nd day of February, 1999.
- --------------------------------------------
Jeffrey Joerres
13
<PAGE> 1
EXHIBIT 10.19(a)
Manpower Inc.
5301 North Ironwood Road
Milwaukee, Wisconsin 53217
February 22, 1999
Mr. Michael J. Van Handel:
We have agreed as follows with respect to the compensation to be paid
and the other benefits to be provided to you in connection with your continuing
employment by Manpower Inc. (the "Corporation"):
1. Term. The term of this agreement (the "Term") will begin on the date
of this letter indicated above and end on the first to occur of the following:
(a) the date two years after the occurrence of a Change of Control, as defined
in the letter to you of even date regarding other rights and obligations on
termination of your employment; (b) January 31, 2002, if no Change of Control
occurs between the date of this letter indicated above and January 31, 2002; or
(c) the Date of Termination, as defined in the letter from the Corporation to
you of even date regarding other rights and obligations on termination of your
employment.
2. Base Compensation. You will be paid a base salary for your services
during the Term equal to Two Hundred Twenty-Five Thousand Dollars ($225,000) per
year, as may be increased from time to time by the Corporation. Your base
compensation will be paid in accordance with the Corporation's regular payroll
practices with respect to such compensation as in effect from time to time.
3. Incentive Bonus. You also will be entitled to receive an incentive
bonus for each full or partial fiscal year of the Corporation included within
the Term. The amount of this incentive bonus will be the amount approved by the
Executive Compensation Committee, in its sole discretion, based upon
recommendation of the Chief Executive Officer of the Corporation. This incentive
bonus will be paid within 45 days after the close of each such fiscal year.
4. Benefits. During the entire Term, the Corporation will provide you
with, and you will be eligible for, all benefits of employment generally made
available to the executives of the Corporation from time to time (collectively,
the "Benefits Plans"), subject to and on a basis consistent with the terms,
conditions and overall administration of such Benefit Plans. You will be
considered for participation in Benefit Plans which by the terms thereof are
discretionary in
<PAGE> 2
nature (such as stock option plans) on the same basis as other executive
personnel of the Corporation of similar rank. You also will be entitled to
vacations and perquisites in accordance with the Corporation's policies as in
effect from time to time for executives of the Corporation.
5. Expenses. The Corporation will reimburse to you on a monthly basis
for all traveling, hotel, entertainment and other expenses reasonably incurred
by you in the proper performance of your duties during the Term, subject to your
compliance with the guidelines and regulations concerning expense reimbursement
issued by the Corporation.
6. Nondisclosure and Nonsolicitation.
(a) Nondisclosure.
(i) You will not, directly or indirectly, at any time
during the term of your employment with the Corporation or any
of its direct or indirect subsidiaries (collectively, the
"Manpower Group") or during the two-year period following your
termination of employment with the Manpower Group, use for
yourself or others, or disclose to others, any Confidential
Information (as defined below), whether or not conceived,
developed, or perfected by you and no matter how it became
known to you, unless (a) you first secure written consent of
the Corporation to such disclosure or use, (b) the same shall
have lawfully become a matter of public knowledge other than
by your act or omission, or (c) you are ordered to disclose
the same by a court of competent jurisdiction or are otherwise
required to disclose the same by law, and you promptly notify
the Corporation of such disclosure. "Confidential Information"
shall mean all business information (whether or not in written
form) which relates to any company in the Manpower Group and
which is not known to the public generally (absent your
disclosure), including but not limited to confidential
knowledge, operating instructions, training materials and
systems, customer lists, sales records and documents,
marketing and sales strategies and plans, market surveys, cost
and profitability analyses, pricing information, competitive
strategies, personnel-related information, and supplier lists.
This obligation will survive the termination of your
employment for a period of two years and will not be construed
to in any way limit the Corporation's rights to protect
confidential information which constitute trade secrets under
applicable trade secrets law even after such two-year period.
(ii) Upon your termination of employment with the
Manpower Group, or at any other time upon request of the
Corporation, you will promptly surrender to the Corporation,
or destroy and certify such destruction to the Corporation,
any documents, materials, or computer or electronic records
containing any Confidential Information which are in your
possession or under your control.
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<PAGE> 3
(b) Nonsolicitation of Employees. You agree that you will not,
at any time during the term of your employment with the Manpower Group
or during the one-year period following your termination of employment
with the Manpower Group, either on your own account or in conjunction
with or on behalf of any other person, company, business entity, or
other organization whatsoever, directly or indirectly induce, solicit,
entice or procure any person who is an employee of any company in the
Manpower Group, or has been such an employee within the three months
preceding such action, to terminate his or her employment with the
Manpower Group so as to accept employment elsewhere.
(c) Injunction. You recognize that irreparable and
incalculable injury will result to the Manpower Group and its
businesses and properties in the event of your breach of any of the
restrictions imposed by Sections 6(a) - (b), above. You therefore agree
that, in the event of any such actual, impending or threatened breach,
the Corporation will be entitled, in addition to any other remedies and
damages available to it, to temporary and permanent injunctive relief
(without the necessity of posting a bond or other security) restraining
the violation, or further violation, of such restrictions by you and by
any other person or entity from whom you may be acting or who is acting
for you or in concert with you.
7. Successors; Binding Agreement. This letter agreement will be binding
on the Corporation and its successors and will inure to the benefit of and be
enforceable by your personal or legal representatives, heirs and successors.
8. Notice. Notices and all other communications provided for in this
letter will be in writing and will be deemed to have been duly given when
delivered in person, sent by telecopy, or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, and properly
addressed to the other party.
9. No Right to Remain Employed. Nothing contained in this letter will
be construed as conferring upon you any right to remain employed by the
Corporation or any member of the Manpower Group or affect the right of the
Corporation or any member of the Manpower Group to terminate your employment at
any time for any reason or no reason, subject to the obligations of the
Corporation and the Manpower Group as set forth herein.
10. Modification. No provision of this letter may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing by you and the Corporation.
11. Withholding. The Corporation shall be entitled to withhold from
amounts to be paid to you hereunder any federal, state, or local withholding or
other taxes or charges which it is, from time to time, required to withhold
under applicable law.
3
<PAGE> 4
12. Previous Agreement. This letter and the letter of even date from
the Corporation to you, regarding other rights and obligations on termination of
your employment, upon acceptance by you, expressly supersede any and all
previous agreements or understandings relating to your employment by the
Corporation or the Manpower Group or the termination of such employment, and any
such agreement or agreements shall, as of the date of your acceptance, have no
further force or effect.
If you are in agreement with the foregoing, please sign and return one
copy of this letter which will constitute our agreement with respect to the
subject matter of this letter.
Sincerely,
MANPOWER INC.
By:
--------------------------------
Agreed as of the 22nd day of February, 1999.
- --------------------------------------------
Michael J. Van Handel
4
<PAGE> 1
EXHIBIT 10.19(b)
Manpower Inc.
5301 North Ironwood Road
Milwaukee, Wisconsin 53217
February 22, 1999
Mr. Michael J. Van Handel:
Manpower Inc. (the "Corporation") desires to retain experienced,
well-qualified executives, like you, to assure the continued growth and success
of the Corporation and its direct and indirect subsidiaries (collectively, the
"Manpower Group"). Accordingly, as an inducement for you to continue your
employment in order to assure the continued availability of your services to the
Manpower Group, we have agreed as follows:
1. Definitions. For purposes of this letter:
(a) Cause. Termination by the Corporation of your employment with the
Corporation for "Cause" will mean termination upon (i) your
willful and continued failure to substantially perform your duties
with the Manpower Group after a written demand for substantial
performance is delivered to you that specifically identifies the
manner in which the Corporation believes that you have not
substantially performed your duties, and you have failed to resume
substantial performance of your duties on a continuous basis
within ten days after receiving such demand, (ii) your commission
of any material act of dishonesty or disloyalty involving the
Manpower Group, (iii) your chronic absence from work other than by
reason of a serious health condition, (iv) your commission of a
crime which substantially relates to the circumstances of your
position with the Manpower Group or which has material adverse
effect on the business of the Manpower Group, or (v) the willful
engaging by you in conduct which is demonstrably and materially
injurious to the Manpower Group. For purposes of this Subsection
1(a), no act, or failure to act, on your part will be deemed
"willful" unless done, or omitted to be done, by you not in good
faith.
(b) Change of Control. A "Change of Control" will mean the first to
occur of the following:
<PAGE> 2
(i) the acquisition (other than from the Corporation), by any
person, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act")), directly or indirectly, of beneficial
ownership (within the meaning of Exchange Act Rule 13d-3) of
more than 50% of the then outstanding shares of common stock
of the Corporation or voting securities representing more
than 50% of the combined voting power of the Corporation's
then outstanding voting securities entitled to vote
generally in the election of directors; provided, however,
no Change of Control shall be deemed to have occurred as a
result of an acquisition of shares of common stock or voting
securities of the Corporation (A) by the Corporation, any of
its subsidiaries, or any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any of
its subsidiaries or (B) by any other corporation or other
entity with respect to which, following such acquisition,
more than 60% of the outstanding shares of the common stock,
and voting securities representing more than 60% of the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, of such other corporation or entity are then
beneficially owned, directly or indirectly, by the persons
who were the Corporation's shareholders immediately prior to
such acquisition in substantially the same proportions as
their ownership, immediately prior to such acquisition, of
the Corporation's then outstanding common stock or then
outstanding voting securities, as the case may be; or
(ii) any merger or consolidation of the Corporation with any
other corporation, other than a merger or consolidation
which results in more than 60% of the outstanding shares of
the common stock, and voting securities representing more
than 60% of the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, of the surviving or consolidated
corporation being then beneficially owned, directly or
indirectly, by the persons who were the Corporation's
shareholders immediately prior to such acquisition in
substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Corporation's
then outstanding common stock or then outstanding voting
securities, as the case may be; or
(iii) any liquidation or dissolution of the Corporation or the
sale or other disposition of all or substantially all of the
assets of the Corporation; or
(iv) individuals who, as of the date of this letter, constitute
the Board of Directors of the Corporation (as of such date,
the "Incumbent Board") cease for any reason to constitute at
least a majority of such Board; provided, however, that any
person becoming a director subsequent to the date of this
letter whose election, or nomination for election by the
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<PAGE> 3
shareholders of the Corporation, was approved by at least a
majority of the directors then comprising the Incumbent
Board shall be, for purposes of this letter, considered as
though such person were a member of the Incumbent Board but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest which was (or, if threatened,
would have been) subject to Exchange Act Rule 14a-11; or
(v) the Corporation shall enter into any agreement (whether or
not conditioned on shareholder approval) providing for or
contemplating, or the Board of Directors of the Corporation
shall approve and recommend that the shareholders of the
Corporation accept, or approve or adopt, or the shareholders
of the Corporation shall approve, any acquisition that would
be a Change of Control under clause (i), above, or a merger
or consolidation that would be a Change of Control under
clause (ii), above, or a liquidation or dissolution of the
Corporation or the sale or other disposition of all or
substantially all of the assets of the Corporation; or
(vi) whether or not conditioned on shareholder approval, the
issuance by the Corporation of common stock of the
Corporation representing a majority of the outstanding
common stock, or voting securities representing a majority
of the combined voting power of the outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors, after giving effect to such
transaction.
Following the occurrence of an event which is not a Change of Control whereby
there is a successor holding company to the Corporation, or, if there is no such
successor, whereby the Corporation is not the surviving corporation in a merger
or consolidation, the surviving corporation or successor holding company (as the
case may be), for purposes of this definition, shall thereafter be referred to
as the Corporation.
(c) Good Reason. "Good Reason" will mean, without your consent, the
occurrence of any one or more of the following during the Term:
(i) the assignment to you of a position which represents a
material reduction from your current positions of Senior
Vice President, Chief Financial Officer, Secretary and
Treasurer or the assignment to you of duties, other than
incidental duties, inconsistent with your current positions
or such other positions, provided you object to such
assignment by written notice to the Corporation within
twenty (20) business days after it is made and the
Corporation fails to cure, if necessary, within ten (10)
business days after such notice is given;
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<PAGE> 4
(ii) any material violation of this agreement or of Sections 2
through 5 of the Compensation Agreement by the Corporation
which remains uncured ten (10) business days after you give
written notice to the Corporation which specifies the
violation;
(iii) any reduction in the amount of incentive bonus received by
you for a given fiscal year during the Term within two years
after the occurrence of a Change of Control, as compared to
the amount of the incentive bonus received by you for the
fiscal year immediately preceding the fiscal year in which
the Change of Control occurred; or
(iv) being required by the Corporation to change the location of
your principal office to one in excess of seventy-five (75)
miles from the Corporation's home office in Glendale,
Wisconsin, provided your employment with the Manpower Group
is terminated within ninety (90) days after any such change
of location.
Your continued employment or failure to give Notice of Termination
will not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder except as
otherwise provided.
(d) Notice of Termination. Any termination of your employment by the
Corporation, or termination by you for Good Reason during the Term
will be communicated by Notice of Termination to the other party
hereto. A "Notice of Termination" will mean a written notice which
specifies a Date of Termination (which date shall be on or after
the date of the Notice of Termination) and, if applicable,
indicates the provision in this letter applying to the termination
and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment
under the provision so indicated.
(e) Date of Termination. "Date of Termination" will mean the date
specified in the Notice of Termination where required (which date
shall be on or after the date of the Notice of Termination) or in
any other case upon your ceasing to perform services for the
Manpower Group.
(f) Term. The "Term" will be a period beginning on the date of this
letter indicated above and ending on the first to occur of the
following: (a) the date two years after the occurrence of a Change
of Control; (b) January 31, 2002, if no Change of Control occurs
between the date of this letter indicated above and January 31,
2002; and (c) the Date of Termination.
(g) Benefit Plans. "Benefit Plans" means all benefits of employment
generally made available to the executives of the Corporation from
time to time.
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<PAGE> 5
(h) Compensation Agreement. The "Compensation Agreement" means the
letter of even date from the Corporation to you, as accepted by
you, regarding your compensation and benefits.
2. Compensation and Benefits on Termination.
(a) Termination by the Corporation for Cause or by You Other Than for
Good Reason. If your employment with the Manpower Group is
terminated by the Corporation for Cause or by you other than for
Good Reason, the Corporation will pay you or provide you with (i)
your full base salary as then in effect through the Date of
Termination, (ii) your unpaid incentive bonus, if any,
attributable to any complete fiscal year of the Corporation ended
before the Date of Termination (but no incentive bonus will be
payable for the fiscal year in which termination occurs,
notwithstanding the terms of the Compensation Agreement), and
(iii) all benefits to which you are entitled under any Benefit
Plans in accordance with the terms of such plans. The Manpower
Group will have no further obligations to you.
(b) Termination of Reason of Disability or Death. If your employment
with the Manpower Group terminates during the Term by reason of
your disability or death, the Corporation will pay you or provide
you with (i) your full base salary as then in effect through the
Date of Termination, (ii) all benefits to which you are entitled
under any Benefit Plans in accordance with the terms of such
plans, (iii) your unpaid incentive bonus, if any, attributable to
any complete fiscal year of the Corporation ended before the Date
of Termination, and (iv) as the incentive bonus for the year in
which termination occurs to be paid pursuant to the Compensation
Agreement, an amount equal to your annual incentive bonus for the
fiscal year of the Corporation immediately preceding the Date of
Termination, prorated for the actual number of days you were
employed by the Manpower Group during the fiscal year in which the
Date of Termination occurs, payable within 45 days after the close
of such fiscal year. The Corporation shall be entitled to
terminate your employment by reason of your disability if you
become disabled and entitled to benefits under the terms of the
long-term disability plan of the Corporation. The Manpower Group
will have no further obligations to you.
(c) Termination for Any Other Reason.
(i) If, during the Term and within two years after the
occurrence of a Change of Control, your employment with the
Manpower Group is terminated for any reason not specified in
Subsection 2(a) or (b), above, you will be entitled to the
following:
(A) the Corporation will pay you your full base salary
through the Date of Termination at the rate in effect
at the time Notice of Termination is given;
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<PAGE> 6
(B) the Corporation will pay you your unpaid incentive
bonus, if any, attributable to any complete fiscal year
of the Corporation ended before the Date of
Termination;
(C) as the incentive bonus for the year in which
termination occurs to be paid under the Compensation
Agreement, the Corporation will pay you an amount equal
to the largest annual bonus awarded to you for the
three fiscal years of the Corporation immediately
preceding the Date of Termination, prorated for the
actual number of days you were employed by the Manpower
Group during the year in which the termination occurs;
(D) the Corporation will pay as a severance benefit to you
a lump-sum payment equal to twice the sum of (i) your
annual base salary in effect at the time Notice of
Termination is given and (ii) the amount of your
largest incentive bonus for the three fiscal years of
the Corporation immediately preceding the Date of
Termination; and
(E) for an eighteen-month period after the Date of
Termination, the Corporation will arrange to provide
you and your eligible dependents, at the Corporation's
expense, with benefits under the medical, dental, life,
and disability plans of the Manpower Group, or benefits
substantially similar to the benefits you were
receiving during the 90-day period immediately prior to
the time Notice of Termination is given under the named
plans; provided, however, that benefits otherwise
receivable by you pursuant to this Subsection
2(c)(i)(E) will be reduced to the extent other
comparable benefits are actually received by you during
the eighteen-month period following your termination,
and any such benefits actually received by you will be
reported to the Corporation; provided, further that any
insurance continuation coverage that you may be
entitled to receive under the Consolidated
Omnibus Budget Reconciliation Act of 1986 ("COBRA")
will commence on the Date of Termination.
(ii) If your employment with the Manpower Group is terminated
during the Term for any reason not specified in Subsection
2(a) or (b), above, and Subsection 2(c)(i) does not apply to
the termination, you will be entitled to the following:
(A) the Corporation will pay you your full base salary
through the Date of Termination at the rate then in
effect;
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<PAGE> 7
(B) the Corporation will pay you your unpaid incentive
bonus, if any, attributable to any complete fiscal year
of the Corporation ended before the Date of
Termination;
(C) as the incentive bonus for the year in which
termination occurs to be paid pursuant to the
Compensation Agreement, the Corporation will pay you an
amount equal to your largest annual incentive bonus for
the three fiscal years of the Corporation immediately
preceding the Date of Termination, prorated for the
actual number of days you were employed by the Manpower
Group during the fiscal year in which the Date of
termination occurs;
(D) the Corporation will pay as a severance benefit to you
a lump-sum payment equal to the amount of your annual
base salary as then in effect plus the amount of your
largest annual incentive bonus for the three fiscal
years of the Corporation immediately preceding the Date
of Termination; and
(E) for the twelve-month period after the Date of
Termination, you and your eligible dependents will
continue to receive benefits under the medical and
dental plans of the Corporation as if your employment
by the Corporation did not terminate; provided, that
the payments or benefits otherwise receivable by you
pursuant to this Subsection 2(c)(ii)(E) will be reduced
to the extent other comparable payments or benefits are
actually received by you during the twelve-month period
following your termination, and any such payments or
benefits actually received by you will be reported to
the Corporation; and provided, further that any
insurance continuation coverage that you may be
entitled to receive under the Consolidated Omnibus
Budget Reconciliation Act of 1986 or similar state laws
will commence on the Date of Termination;
The amounts paid to you pursuant to Subsections 2(c)(i)(D) or
2(c)(ii)(D) will not be included as compensation for purposes of any
qualified or nonqualified pension or welfare benefit plan of the
Manpower Group.
(d) Golden Parachute Tax.
(i) Notwithstanding anything contained in this letter to the
contrary, in the event that any payment or distribution to
or for your benefit pursuant to the terms of this letter (a
"Payment" or "Payments") would be subject to the excise tax
imposed by Section 4999 of the Internal
7
<PAGE> 8
Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties are incurred by you with respect to
such excise tax (such excise tax, together with any interest
and penalties, are collectively referred to as the "Excise
Tax"), then you shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after
payment by you of all taxes (including any interest or
penalties imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, you retain an
amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(ii) A determination shall be made as to whether and when a
Gross-Up Payment is required pursuant to this Subsection
2(d) and the amount of such Gross-Up Payment, such
determination to be made within fifteen business days of the
Date of Termination, or such other time as requested by the
Corporation or by you (provided you reasonably believe that
any of the Payments may be subject to the Excise Tax). Such
determination shall be made by a national independent
accounting firm selected by you (the "Accounting Firm"). All
fees, costs and expenses (including, but not limited to, the
cost of retaining experts) of the Accounting Firm shall be
borne by the Corporation and the Corporation shall pay such
fees, costs and expenses as they become due. The Accounting
Firm shall provide detailed supporting calculations,
acceptable to you, both to the Corporation and you. The
Gross-Up Payment, if any, as determined pursuant to this
Subsection 2(d)(ii) shall be paid by the Corporation to you
within five business days of the receipt of the Accounting
Firm's determination. Any such initial determination by the
Accounting Firm of whether or when a Gross-Up Payment is
required and, if such a payment is required, the amount
thereof shall be binding upon the Corporation and you
subject to the application of Subsection 2(d)(iii).
(iii) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a
Gross-Up Payment (or a portion thereof) will be paid which
should not have been paid (an "Overpayment") or a Gross-Up
Payment (or a portion thereof) which should have been paid
will not have been paid (an "Underpayment"). An Underpayment
shall be deemed to have occurred upon notice (formal or
informal) to you from any governmental taxing authority that
your tax liability (whether in respect of your then current
taxable year or in respect of any prior taxable year) may be
increased by reason of the imposition of the Excise Tax on a
Payment or Payments with respect to which the Corporation
has failed to make a sufficient Gross-Up Payment. An
Overpayment shall be deemed to have
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<PAGE> 9
occurred upon a "Final Determination" (as hereinafter
defined) that the Excise Tax shall not be imposed upon a
Payment or Payments with respect to which you had previously
received a Gross-Up Payment. A Final Determination shall be
deemed to have occurred when you have received from the
applicable governmental taxing authority a refund of taxes
or other reduction in your tax liability by reason of the
Overpayment and upon either (A) the date a determination is
made by, or an agreement is entered into with, the
applicable governmental taxing authority which finally and
conclusively binds you and such taxing authority, or in the
event that a claim is brought before a court of competent
jurisdiction, the date upon which a final determination has
been made by such court and either all appeals have been
taken and finally resolved or the time for all appeals has
expired or (B) the expiration of the statute of limitations
with your applicable tax return. If an Underpayment occurs,
you shall promptly notify the Corporation and the
Corporation shall pay to you at least five business days
prior to the date on which the applicable governmental
taxing authority has requested payment, an additional
Gross-Up Payment equal to the amount of the Underpayment
plus any interest and penalties imposed on the Underpayment.
If an Overpayment occurs, the amount of the Overpayment
shall be treated as a loan by the Corporation to you and you
shall, within ten business days of the occurrence of such
Overpayment, pay to the Corporation the amount of the
Overpayment plus interest at an annual rate equal to the
rate provided for in Section 1274(b)(2)(B) of the Code from
the date the Gross-Up Payment (to which the Overpayment
relates) was paid to you.
(iv) Notwithstanding anything contained in this letter to the
contrary, in the event it is determined that an Excise Tax
will be imposed on any Payment or Payments, the Corporation
shall pay to the applicable governmental taxing authorities
as Excise Tax withholding, the amount of the Excise Tax that
the Corporation has actually withheld from the Payment or
Payments.
(e) Payment. The payments provided for in Subsections 2(c)(i)(A)
through (D) or 2(c)(ii)(A) through (D), above, will be made not
later than the fifteenth business day following the Date of
Termination, except as otherwise provided. If any of such payments
is not made when due (hereinafter a "Delinquent Payment"), in
addition to such principal sum, the Corporation will pay you
interest on any and all such Delinquent Payments from the date due
computed at the prime rate as announced from time to time by
Firstar Bank of Milwaukee, compounded monthly.
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<PAGE> 10
(f) No Mitigation. You will not be required to mitigate the amount of
any payment or benefit provided for in this Section 2 by seeking
other employment or otherwise, nor will the amount of any payment
provided for in this Section 2, unless otherwise provided herein,
be reduced by any compensation earned by you as the result of
employment by another employer after the Date of Termination, or
otherwise.
(g) Release of Claims. Notwithstanding the foregoing, the Corporation
will not pay you, and you have no right to receive, any benefits
described in Section 2, above, unless and until you execute, and
there shall be effective following any statutory period for
revocation, a release, in a form reasonably acceptable to the
Corporation, that irrevocably and unconditionally releases,
waives, and fully and forever discharges the Manpower Group and
its past and current directors, officers, employees, and agents
from and against any and all claims, liabilities, obligations,
covenants, rights, demands and damages of any nature whatsoever,
whether known or unknown, anticipated or unanticipated, relating
to or arising out of your employment with the Manpower Group,
including without limitation claims arising under the Age
Discrimination in Employment Act of 1967, as amended, Title VII of
the Civil Rights Act of 1964, as amended, the Civil Rights Act of
1991, the Equal Pay Act, as amended, and any other federal, state,
or local law or regulation.
(h) Forfeiture. Notwithstanding the foregoing, your right to receive
the payments and benefits to be provided to you under this Section
2 beyond those described in Subsection 2(a), above, is conditioned
upon your performance of the obligations stated in Section 3,
below, and in Section 6 of the Compensation Agreement, and upon
your breach of any such obligations, you will immediately return
to the Corporation the amount of such payments and benefits and
you will no longer have any right to receive any such payments or
benefits.
3. Noncompetition Agreement.
(a) Noncompetition. During the term of your employment with the
Manpower Group, you will not assist any competitor of any company
in the Manpower Group in any capacity. During the one-year period
which immediately follows the termination of your employment with
the Manpower Group: you will not, directly or indirectly, contact
any customer or prospective customer of the Corporation with whom
you have had contact on behalf of the Corporation during the
two-year period preceding the date of such termination or any
customer or prospective customer about whom you obtained
confidential information in connection with your employment by the
during such two-year period so as to cause or attempt to cause
such customer or prospective customer of the Corporation not to do
business or to reduce such customer's business with the
Corporation or divert any business from the Corporation. you will
not, directly or indirectly, provide services or assistance of a
nature similar to the services provided to the Manpower Group
during the term of your employment with the Manpower Group to any
entity engaged in the business of providing temporary staffing
services anywhere in the United States or any other country in
which the Manpower Group conducts business as of the Date of
Termination which has, together with its affiliated entities,
annual revenues from such business in excess of $500,000,000. You
acknowledge that the scope of this limitation is reasonable in
that, among other things, providing any such services or
assistance
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<PAGE> 11
during such one-year period would permit you to use unfairly your
close identification with the Manpower Group and would involve the
use or disclosure of confidential information pertaining to the
Manpower Group.
(b) Injunction. You recognize that irreparable and incalculable injury
will result to the Manpower Group and its businesses and
properties in the event of your breach of any of the restrictions
imposed by Subsection 3(a), above. You therefore agree that, in
the event of any such actual, impending or threatened breach, the
Corporation will be entitled, in addition to the remedies set
forth in Subsection 2(h), above, and any other remedies and
damages, to temporary and permanent injunctive relief (without the
necessity of posting a bond or other security) restraining the
violation, or further violation, of such restrictions by you and
by any other person or entity from whom you may be acting or who
is acting for you or in concert with you.
(c) Nonapplication. Notwithstanding the above, this Section 3 will not
apply if your employment with the Corporation is terminated by you
for Good Reason or by the Corporation without Cause within two
years after the occurrence of a Change of Control.
4. Nondisparagement. Upon your termination of employment with the Manpower
Group for any reason, the Manpower Group agrees to maintain a positive
and constructive attitude and demeanor toward you, and agrees to
refrain from making any derogatory comments or statements of a negative
nature about you. Upon your termination of employment with the Manpower
Group for any reason, you agree to maintain a positive and constructive
attitude and demeanor toward the Manpower Group, and agree to refrain
from making derogatory comments or statements of a negative nature
about the Manpower Group, its officers, directors, shareholders,
agents, partners, representatives and employees, to anyone.
5. Successors; Binding Agreement. This letter agreement will be binding on
the Corporation and its successors and will inure to the benefit of and
be enforceable by your personal or legal representatives, heirs and
successors.
6. Notice. Notices and all other communications provided for in this
letter will be in writing and will be deemed to have been duly given
when delivered in person, sent by telecopy, or mailed by United States
registered or certified mail, return receipt requested, postage
prepaid, and properly addressed to the other party.
7. No Right to Remain Employed. Nothing contained in this letter will be
construed as conferring upon you any right to remain employed by the
Corporation or any member of the Manpower Group or affect the right of
the Corporation or any member of the Manpower Group to terminate your
employment at any time for any reason or no reason, subject to the
obligations of the Corporation and the Manpower Group as set forth
herein.
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8. Modification. No provision of this letter may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to
in writing by you and the Corporation.
9. Withholding. The Corporation shall be entitled to withhold from amounts
to be paid to you hereunder any federal, state, or local withholding or
other taxes or charges which it is, from time to time, required to
withhold under applicable law.
10. Previous Agreement. This letter, upon acceptance by you, and the
Compensation Agreement expressly supersede any and all previous
agreements or understandings relating to your employment by the
Corporation or the Manpower Group or the termination of such
employment, and any such agreement or agreements shall, as of the date
of your acceptance, have no further force or effect.
If you are in agreement with the foregoing, please sign and return one
copy of this letter which will constitute our agreement with respect to the
subject matter of this letter.
Sincerely,
MANPOWER INC.
By:
---------------------------------
Agreed as of the 22nd day of February, 1999.
- --------------------------------------------
Michael J. Van Handel
12
<PAGE> 1
1998 Annual Report
Manpower Inc.
<PAGE> 2
EXHIBIT 13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
- ------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
SYSTEMWIDE SALES (a) $10,523,377 $ 8,899,946 $ 7,506,313
REVENUES FROM SERVICES $ 8,814,272 $ 7,258,504 $ 6,079,905
OPERATING MARGIN (b) $ 222,503 $ 255,387 $ 226,957
</TABLE>
SYSTEMWIDE SALES (a)(c) OPERATING MARGIN (b)(c)
(in billions of US dollars) (in millions of US dollars)
[CHART] [CHART]
(a) Represents total sales of Company-owned branches and franchises.
(b) For 1998, Operating Margin does not include the Write-down of Capitalized
Software, and for years prior to 1994, Operating Margin does not include the
charge for the Amortization of Intangible Assets. This earnings measurement is
not determined pursuant to generally accepted accounting principles (GAAP) and
should not be considered in isolation or as an alternative to GAAP-derived
measures.
(c) Graphical information for years prior to 1991 represents Manpower
International Inc., the Company's primary operating subsidiary, until June 30,
1996, when it was merged into the Company. This presentation is believed to be
the most meaningful as Manpower Inc. was formed as a United States company in
1991. Manpower International Inc.'s Revenues from Services comprise
approximately 95% of the Company's Revenues from Services for each of the years
1991 through 1995.
<PAGE> 3
CHAIRMAN'S MESSAGE
March 16, 1999
Dear Shareholders,
The 1998 year was one in which we achieved new record high levels of
revenue and global market geographic coverage, but faced several problems that
caused a short term delay in matching our record revenues with record profits.
As the millenium comes clearly into view, we believe we can continue our top
line growth and match it with profitability.
Systemwide sales for the year exceeded the milestone $10 billion mark,
representing a doubling of sales from 1993 to 1998. This doubling represents an
addition of $6.2 billion of Systemwide sales. This growth has been achieved
organically without material acquisitions or mergers and continues to give us
the largest single brand of Staffing Services in the world.
As 1998 came to a close, we made a very difficult but necessary decision to
write down the capitalized value of our U.S. computer software which was
intended to be used by our U.S. operating offices. The abandonment of this
software was based on the projected maintenance, support and communications
costs which would impact too heavily on our profits in the years ahead. While
the write-down heavily impacted 1998 profits, we believe that we can create new
software implementing the unique features and processes of the planned system,
and produce the intended result with much lower support costs.
<PAGE> 4
The after-tax impact of the write-down was $57.1 million, all of which was
reflected in our Fourth Quarter results. The new system was planned to provide a
distinct competitive edge and we believe we can still accomplish that objective
within our total project cost budget. That process is currently under way and
our present systems are fully operational and adequate to fully meet our
operational needs and customer requirements. Despite the write-down, we were
able to produce a profit for the year and maintain a sound financial condition.
Our 3,200 worldwide offices once again employed approximately more than two
million workers in 1998 and logged 725 million hours of work for our global
customer base.
During the 1998 year, we opened 413 new Manpower offices, reaching 100
offices in Italy as that important EU nation legalized Temporary Staffing for
the first time. We now have a solid base of Italian operations which should add
important profit growth for us in the future. While these new offices
represented an operating cost of over $4 million in the start-up phase, we
expect the operations to produce a profit in 1999 and to grow future operations
and additional offices on a self-funding basis. Our management team in Italy has
<PAGE> 5
done an excellent job of developing prime locations, operating staff and a
valuable customer base in just one year. Additional geographic expansion
involved new offices in Germany, France, Spain, Australia, the U.S., Finland and
Korea. In general, we now cover virtually all developed countries and we now
focus on fleshing out our networks in countries that offer the best
opportunities for profitable growth.
In terms of the skill sets which make up our revenue base, we continue to
strive for a balance that matches the global labor force as a whole. We believe
that the best opportunity for sustained growth at our volume level is the
ability to provide a flexible workforce in the numbers and places required by
our customer base. In 1998, we saw a slight contraction in the Manufacturing
sector but experienced good growth in our Technical divisions, particularly in
IT skills. We now have over 200 of our offices across the globe devoted entirely
to Technical and IT personnel, and our revenue base in that field should reach
the $800 million mark in 1999.
Another area of rapid growth in 1998 was the providing of call center
personnel, particularly for customer service and help-desk functions. Our early
experience and success in call center staffing in the U.S. and the U.K. has led
to an expansion of opportunities in Europe, Latin America and Asia.
<PAGE> 6
Manpower's proprietary assessment and training programs are proving to
reduce operator turnover and increase productivity scale. Today, an estimated
25,000 Manpower employees are manning call centers across the globe,
representing approximately 10% of our total daily temporary workforce. We have
developed a multinational team of experts in call center staffing who aid in
planning, implementation and execution of call center staffing contracts.
Our belief in balance in geographic locations and skill categories extends
as well to a balanced customer base from a size point of view. While over 35% of
our revenue base represents high-volume users, no one customer represents more
than 2% of the total. In 1998, the major customer base grew at a faster pace
than the business as a whole and created significant opportunities for global
expansion of the relationships.
As the decades of the 1980s and 1990s each brought about major changes in
the Staffing Industry, the coming opening decade of the new millennium will
likely create yet another set of changes in customer usage trends, skill set
demands and governmental relationships. I believe that Manpower's vast
experience, its international scale, its single brand positioning, and its
strong culture equip it uniquely to address the changes with confidence and
strength.
<PAGE> 7
In the financial highlights section, you will see our growth record in both
sales and operating profits for the past decade. With the exception of the 1998
decline in normal operating profit, the decade has been a notable success due
entirely to the youthful, experienced and dedicated operating management group.
Manpower's challenge in 1999 is to close the decade with a profit
performance that once again returns to record heights.
Respectfully yours,
/s/ MITCHELL S. FROMSTEIN
Mitchell S. Fromstein
Chairman, President and
Chief Executive Officer
<PAGE> 8
FINANCIAL REVIEW
Consolidated Results
During 1998 the Company posted record system-wide sales of $10.5 billion, which
represents a doubling of systemwide sales since 1993. Revenues increased 21%
(23% in constant currency) to $8.8 billion.
MANPOWER INC.
REVENUES
1996-98
(in billions of US dollars)
[CHART]
Operating profits, before the write-down of capitalized software, declined
to 2.5% of revenues from 3.5% of revenues. (See page 10 of Management's
Discussion and Analysis for a discussion of the software write-down.) This
decline in operating margin is primarily attributable to a 1% decline in the
gross profit margin precipitated by a change in French payroll tax legislation.
(See further discussion on page 10.)
Selling and administrative expenses as a percent of revenue remained
constant at 14.5% as the company achieved overhead costs leverage in several
markets. These economies of scale offset the costs of investments in new offices
and infrastructure enhancements. On a worldwide basis, the Company opened 413
new offices during 1998.
During the course of this year, the Company repurchased 1.9 million shares
of stock for $43.9 million. The Company has an additional 10.7 million shares
authorized for repurchase under its repurchase program.
MANPOWER INC.
OPERATING MARGIN
1996-98
(in millions of US dollars)
[CHART]
The Company's balance sheet remains strong, with a debt to capital ratio of
28%.
UNITED STATES
The Company's United States operation reached record systemwide sales of $3.6
billion and revenues of $2.2 billion, increases of 7% and 8%, respectively.
UNITED STATES
SYSTEMWIDE SALES
1996-98
(in millions of US dollars)
[CHART]
Revenues of Manpower Technical were up a solid 15% over 1997, as Manpower
Technical continues to become a more important part of our total business mix.
Included in Manpower Technical are the Company's information technology
services, which increased 26% over 1997. The office services sector posted
consistent revenue gains throughout the year of approximately 9%. Included in
this sector is the call center business, which increased in excess of 20%. The
Company continues to differentiate itself in the call center arena, offering a
variety of outsourcing solutions incorporating its industry-leading employee
selection, testing and training tools.
Revenues of the industrial/light industrial sector increased 4% for the
year. After experiencing strong year-over-year gains of 11% in the first
quarter, revenues of this sector slowed considerably, reflecting the slow-down
in U.S. manufacturing activity.
UNITED STATES
OPERATING PROFITS
1996-98
(in millions of US dollars)
[CHART]
U.S. operating profits were down 16% for the year. While gross margins
improved, these gains were offset by an increase in selling and administrative
expenses. The year-over-year increase in selling and administrative costs slowed
considerably in the fourth quarter as the Company took measures to decrease
expense growth in the second half of the year, after experiencing a decline in
revenue growth in the second quarter.
7
<PAGE> 9
FRANCE
Revenues in France grew 34% to FFR 21.4 billion ($3.6 billion), representing a
doubling of business over the last three years. This strong revenue growth was
the result of a robust French economy, as well as revenue gains from new office
openings in recent years. Manpower France continues to maintain its market
leadership position, with an estimated market share of over 24%.
FRANCE
REVENUES
1996-98
(in millions of US dollars)
[CHART]
Operating profits declined 16% in 1998, as a result of a change in
legislation effective January 1, 1998, whereby the French government reduced the
amount of payroll tax subsidies offered under its employment incentive programs.
Gross margins in the fourth quarter reflected evidence of improved pricing as
the Company was able to begin recovering these cost increases from its
customers.
FRANCE
OPERATING PROFITS
1996-98
(in millions of US dollars)
[CHART]
UNITED KINGDOM
The Company's U.K. operations posted record revenues, exceeding the $1 billion
mark ((pound)656.4 million). The revenue growth in the second half of the year
accelerated to 12% over the prior year, resulting in an overall 9% revenue
increase for the year.
UNITED KINGDOM
REVENUES
1996-98
(in millions of US dollars)
[CHART]
The operating profit increased 5% despite a somewhat lower gross margin,
reflecting effective cost management.
UNITED KINGDOM
OPERATING PROFITS
1996-98
(in millions of US dollars)
[CHART]
8
<PAGE> 10
OTHER EUROPE
Revenues of the Other Europe segment also topped the $1 billion mark, increasing
35% to $1.2 billion. Revenues in constant currency grew a remarkable 38% for the
second consecutive year and have more than doubled in the last three years.
OTHER EUROPE
REVENUES
1996-98
(in millions of US dollars)
[CHART]
The Company continues to aggressively expand its office network in the less
mature staffing markets in Europe, which include Germany, Italy, Spain and
Sweden, adding over 150 offices within these countries alone. Combined revenues
of these countries increased over 70% compared to 1997. Combined operating
profits also increased sharply, with Germany and Sweden both posting increases
in excess of 50%.
Record revenues and operating profits were achieved in the more mature
markets of the Netherlands, Norway and Switzerland. Strong growth was also
realized in Austria, Belgium, Denmark and Finland. The Company began new
operations in Greece near the end of 1998.
OTHER EUROPE
OPERATING PROFITS
1996-98
(in millions of US dollars)
[CHART]
OTHER COUNTRIES
Revenues in the Other Countries segment increased 11% to $781.2 million. Revenue
increases were somewhat mitigated by the strength of the dollar relative to the
local currencies as revenues were up 22% in constant currency.
OTHER COUNTRIES
REVENUES
1996-98
(in millions of US dollars)
[CHART]
The Company's operations in Japan realized a strong 12% increase in revenue
growth, despite recessionary economic conditions. Operating margins in Japan
declined slightly as a result of pricing pressures during the current economic
downturn. While secular trends in Japan remain very strong, we anticipate a
continued slowing in revenue growth and pricing pressures until the economy
begins to strengthen.
The Company's Australian and New Zealand operations showed very strong
growth during 1998, with revenues increasing over 90% and profits more than
doubling. These results reflect the Company's continued expansion in the market,
which included the addition of 40 offices in 1998.
After a spectacular year in 1997, revenues and operating profits of the
Company's Mexico operation declined, as anticipated, due to the conclusion of
several large one-time contracts. Despite this decline, 1998 revenues represent
a tripling of revenues from the 1996 level.
The Company also achieved solid results in Israel, Canada and South
America. We continued our expansion in the Far East region with new offices in
Korea and India.
OTHER COUNTRIES
OPERATING PROFITS
1996-98
(in millions of US dollars)
[CHART]
9
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NATURE OF OPERATIONS
Manpower Inc. (the "Company") is one of the largest non-governmental employment
services organization in the world, based on systemwide sales, with over 3,100
systemwide offices in 50 countries. The Company is primarily engaged in
temporary staffing services, contract services and employee training and
testing.
RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Revenues from services increased 21.4% and 19.4% in 1998 and 1997, respectively.
Revenues were unfavorably impacted by changes in currency exchange rates during
1998 and 1997 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 23.0% in 1998 and 27.2% in 1997.
Volume, as measured by billable hours of branch operations, increased 16.5% in
1998 and 24.8% in 1997. All of the Company's major markets experienced revenue
increases in 1998 in their local currencies, including the United States (8.0%),
France (34.4%) and the United Kingdom (8.7%).
Cost of services, which consists of payroll and related expenses of
temporary workers, increased as a percentage of revenues to 82.9% in 1998 from
81.9% in 1997 and 81.1% in 1996. 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 resulted in higher payroll
taxes and thus a higher cost of services, and is the primary reason for the
increased cost of services in 1998. Similarly, during 1997 a number of countries
reduced or eliminated these programs, resulting in the increased cost of
services over the 1996 level.
Selling and administrative expenses, as a percentage of revenues, was 14.5%
in 1998 and 1997 and 15.1% in 1996. The Company was able to maintain overhead
costs as a constant percentage of revenue in 1998, despite a significant
investment in new markets and infrastructure enhancements. Selling and
administrative expenses as a percentage of revenues were higher in 1996 due to
various non-recurring costs, including sponsorship of the 1998 World Cup.
In December 1998, the Company recorded a $92.1 million ($57.1 million
after-tax) non-cash charge to write off the carrying value of software costs and
certain hardware and network infrastructure costs related to the development of
a complex and proprietary information system for its North American branch
office administration, invoicing and payroll processing. (See Note 2 to the
Consolidated Financial Statements for further information.)
Interest and other expenses includes net interest expense of $10.8 million
in 1998 and $3.1 million in 1997 and net interest income of $1.0 million in
1996. Net interest expense was primarily impacted by increases in worldwide
borrowing levels. In 1996, a non-recurring gain of $15.5 million was recorded
related to the sale of the Company's remaining equity interests in two former
non-Manpower brand subsidiaries based in the United Kingdom.
The Company provided for income taxes at a rate of 33.5% in 1998 compared
to 34.2% in 1997 and 33.0% in 1996. The decrease in the rate between 1998 and
1997 relates primarily to the increased utilization of net operating loss
carryforwards. The increased rate in 1997 over 1996 primarily relates to the
increase in the French corporate income tax rate, from 36.6% to 41.6%, effective
as of January 1, 1997. In 1998, 1997 and 1996, the Company's effective income
tax rate is lower than the U.S. Federal statutory rate due to the utilization of
capital and net operating loss carryforwards that had been fully reserved for in
prior years.
Net earnings per share, on a fully diluted basis, was $.93 in 1998, $1.97
in 1997 and $1.94 in 1996. Excluding the write-down of capitalized software,
1998 diluted earnings per share was $1.64. The 1998 earnings were negatively
impacted $.07 per share due to the lower currency exchange rates during the
year. The weighted average shares outstanding decreased 2.6% in 1998 compared to
1997 due to the Company's treasury stock purchases and a smaller effect of
dilutive stock options caused by the lower average share price during 1998. (See
Note 4 to the Consolidated Financial Statements for further information). The
weighted average shares outstanding remained constant in 1997 compared to 1996
as the Company's treasury stock purchases offset normal issuances. On an
undiluted basis, net earnings per share was $.94 in 1998 ($1.66 excluding the
write-down of capitalized software), $2.01 in 1997 and $1.98 in 1996.
10
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
CASH SOURCES
Cash provided by operating activities was $265.2 million, $25.3 million and
$92.7 million in 1998, 1997 and 1996, respectively. Included in 1998 is $175.0
million of cash received from the sale of accounts receivable in the U.S. (See
"Capital Resources" for a discussion of this program). Cash provided by
operating activities was also significantly impacted by changes in working
capital. Excluding the sale of accounts receivable in 1998, cash used to support
net working capital needs was $107.6 million, $198.0 million and $90.6 million
in 1998, 1997 and 1996, respectively. The significant revenue growth in France,
where Days Sales Outstanding is in excess of 70 days, is the primary reason for
the large working capital needs in 1998 and 1997. Cash provided by operating
activities before working capital changes was $197.8 million, $223.3 million and
$183.3 million in 1998, 1997 and 1996, respectively.
Accounts receivable increased to $1,674.7 million at December 31, 1998 from
$1,437.4 million at December 31, 1997. This change is due to the increased sales
levels in all of the Company's major markets, offset by the sale of accounts
receivable and the impact of currency exchange rates. Without the sale of
accounts receivable and at constant exchange rates, receivables would have
increased an additional $175.0 million and $59.5 million, respectively.
Cash from operating activities in 1998 was used to repay borrowings of $9.8
million, for investments in new markets, capital expenditures and acquisitions
and to repurchase the Company's common stock. Net cash provided by borrowings
was $137.8 million in 1997 and $29.5 million in 1996. The additional borrowings
in 1997 were primarily used to support the working capital growth, capital
expenditures and the repurchase of the Company's common stock. The additional
borrowings in 1996 were used to support working capital growth and acquisitions.
CASH USES
Capital expenditures increased to $140.8 million in 1998 from $98.6 million in
1997 and $55.1 million in 1996. These expenditures include capitalized software
of $40.1 million, $37.6 million and $14.2 million in 1998, 1997 and 1996,
respectively. The balance is comprised of purchases of computer equipment,
office furniture and other costs related to office openings and refurbishments.
From time to time, the Company acquires certain franchises and other
unrelated companies throughout the world. The total cash consideration paid for
acquisitions, net of cash acquired, was $31.7 million in 1998, $16.5 million in
1997 and $32.4 million in 1996.
In October 1998, the Board of Directors authorized an additional ten
million shares for repurchase under the Company's share repurchase program.
Stock repurchases may be made from time to time and may be implemented through a
variety of methods, including open market purchases, block transactions,
privately negotiated transactions, accelerated share repurchase programs,
forward repurchase agreements or similar facilities. The additional
authorization increases the total number of shares that may be repurchased to
fifteen million shares. At December 31, 1998, 4.3 million shares at a cost of
$129.0 million have been repurchased under the program, $43.9 million of which
were repurchased during 1998.
The Company paid dividends of $15.2 million, $13.8 million and $12.3
million in 1998, 1997 and 1996, respectively.
Cash and cash equivalents increased $38.2 million in 1998 compared to a
decrease of $38.3 million in 1997 and an increase of $37.8 million in 1996.
11
<PAGE> 13
CAPITALIZATION
Total capitalization at December 31, 1998 was $926.8 million, comprised of
$257.9 million of debt and $668.9 million of equity. Debt as a percentage of
total capitalization decreased to 28% in 1998 from 30% in 1997, due in part to
the proceeds from the sale of accounts receivable, which were used to repay
borrowings.
CAPITAL RESOURCES
The Company has a $415.0 million unsecured revolving credit agreement that
includes a $90.0 million commitment to be used exclusively for standby letters
of credit. Borrowings of $75.3 million and letters of credit of $48.2 million
were outstanding under the facility at December 31, 1998. The facility matures
on November 25, 2002 and may be increased to a maximum of $500.0 million or
extended for an additional year with the lenders' consent. The agreement
requires, among other things, that the Company comply with an interest coverage
ratio of not less than 3.0 to 1, a debt-to-capitalization ratio of less than .55
to 1 and a maximum subsidiary debt facility level of $50.0 million. As of
December 31, 1998, the Company had an interest coverage ratio of 14.0 to 1, a
debt-to-capitalization ratio (as defined under the agreement) of .36 to 1 and a
subsidiary debt facility level of $49.9 million.
Borrowings of $71.9 million were outstanding under the Company's $75.0
million U.S. commercial paper program. Commercial paper borrowings, which are
backed by the unsecured revolving credit agreement, have been classified as
long-term debt due to the availability to refinance them on a long-term basis
under the revolving credit facility.
In addition to the above, the Company and some of its foreign subsidiaries
maintain separate lines of credit with local financial institutions to meet
working capital needs. As of December 31, 1998, such lines totaled $174.7
million, of which $75.5 million was unused.
In 1998, a wholly-owned subsidiary of the Company entered into an agreement
to sell, on an ongoing basis, up to $200.0 million of an undivided interest in
its accounts receivable. The amount of receivables sold under this agreement
totaled $175.0 million at December 31, 1998. Unless extended by amendment, the
agreement expires in December 1999. (See Note 3 to the Consolidated Financial
Statements for further information.)
The Company's principal on-going cash needs are to finance working capital,
capital expenditures, acquisitions and the share repurchase program. Working
capital is primarily in the form of trade receivables, which increase as
revenues increase. The amount of financing necessary to support revenue growth
depends on receivable turnover, which differs in each market in which the
Company operates.
The Company believes that the combination of internally generated funds and
its existing credit facilities are sufficient to cover its near term projected
cash needs. With continued revenue increases, additional borrowings under the
existing facilities would be necessary to finance anticipated working capital
requirements.
12
<PAGE> 14
SIGNIFICANT MATTERS AFFECTING RESULTS OF OPERATIONS
MARKET RISKS
The Company is exposed to the impact of interest rate changes and foreign
currency fluctuations.
Interest Rates - The Company's exposure to market risk for changes in
interest rates relates primarily to the Company's long-term debt obligations,
the majority of which are denominated in U.S. Dollars. The Company has
historically managed interest rates through the use of a combination of fixed
and variable rate borrowings. As of December 31, 1998, substantially all of the
Company's long term obligations have variable interest rates.
Interest rate swaps may be used to adjust interest rate exposures when
appropriate. During 1998, the Company entered into an interest rate swap
agreement, expiring in 2001, to fix the interest rate at 6.0% on $50.0 million
of the Company's revolving credit borrowings under the revolving credit
agreement. The fair value of this agreement, the impact on cash flows and the
interest expense recorded during 1998 were not material.
A 35 basis point (.35%) move in interest rates on the Company's variable
rate borrowings (10% of the weighted average worldwide interest rate) would have
an immaterial impact on the Company's earnings before income taxes and cash
flows in each of the next five years. In addition, a 35 basis point move in
interest rates would have an immaterial impact on the fair value, interest
expense and cash flows related to the Company's interest rate swap agreement.
Exchange Rates - Other than intercompany transactions between the United
States and the Company's foreign entities, the Company generally does not have
significant foreign currency transactions that are denominated in a currency
other than the functional currency applicable to each entity.
Over 70% of the Company's revenues are generated outside of the United
States. As a result, fluctuations in the value of foreign currencies against the
dollar may have a significant impact on the reported results of the Company.
Revenues and expenses denominated in foreign currencies are translated into
United States dollars at the weighted average exchange rate for the year.
Consequently, as the value of the dollar strengthens relative to other
currencies in the Company's major markets, as it did on average in 1998, the
resulting translated revenues, expenses and operating profits are lower. Using
constant exchange rates, 1998 revenues and operating profits would have been
approximately 2% higher than reported.
Fluctuations in currency exchange rates may also impact the stockholders'
equity of the Company. The assets and liabilities of the Company's non-U.S.
subsidiaries are translated into United States dollars at the exchange rates in
effect at year-end. The resulting translation adjustments are recorded in
stockholders' equity as Accumulated other comprehensive loss. The dollar was
weaker relative to many of the foreign currencies at December 31, 1998 compared
to December 31, 1997. Consequently, the Accumulated other comprehensive loss
component of stockholders' equity decreased $22.8 million during the year. Using
the year end exchange rates, the total amount permanently invested in
subsidiaries at December 31, 1998 is approximately $1.2 billion.
13
<PAGE> 15
Although currency fluctuations impact the Company's reported results, such
fluctuations generally do not affect the Company's cash flow or result in actual
economic gains or losses. Each of the Company's subsidiaries derives revenues
and incurs expenses within a single country and consequently, does not generally
incur currency risks in connection with the conduct of their normal business
operations. The Company generally has few cross border transfers of funds,
except for transfers to the United States to fund the expense of the Company's
international headquarters and working capital loans made from the United States
to the Company's foreign subsidiaries. To reduce the currency risk related to
the loans, the Company may borrow funds under the Revolving Credit Agreement in
the foreign currency to lend to the subsidiary, or alternatively, may enter into
a forward contract to hedge the loan. Foreign exchange gains and losses
recognized on any transactions are included in the Consolidated Statements of
Operations and historically have been immaterial. The Company generally does not
engage in hedging activities, except as discussed above. The Company did not
hold any derivative instruments, except the interest rate swap discussed above,
at December 31, 1998.
The Company holds a 49% interest in its Swiss franchise, which holds an
investment portfolio of approximately $65.0 million as of December 31, 1998.
This portfolio is invested in a wide diversity of European and U.S. debt and
equity securities as well as various professionally-managed funds. To the extent
that there are gains or losses related to this portfolio, the Company's
ownership share is included in its consolidated operating results.
IMPACT OF ECONOMIC CONDITIONS
Because one of the principal attractions of using temporary staffing services is
to maintain a flexible supply of labor to meet changing economic conditions, the
industry has been and remains sensitive to economic cycles. While the Company
believes that the wide spread of its operations generally cushions it against
the impact of an adverse economic cycle in any single country, adverse economic
conditions in any of its three largest markets would likely have a material
impact on the Company's consolidated operating results.
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") systems, as well as
its non-IT systems. In connection with this project, all significant Company
locations have done assessments of their IT and non-IT systems to determine what
modifications will be required, and have developed detailed plans and timetables
to complete and test the necessary remediation.
The Company is in the process of converting and upgrading many of its
internal information systems, to systems that are Year 2000 compliant, primarily
due to changing customer requirements. For those systems not otherwise being
converted or upgraded, remediation efforts have been planned. These efforts are
currently completed in the U.S. and are scheduled to be completed by June of
1999 for all other significant locations. Testing of the remediation is
scheduled to be completed by the end of the first quarter of 1999 in the U.S.
and during the second and third quarters of 1999 for all other significant
locations. The remediation or replacement of all critical non-IT systems is
scheduled to be completed during the second and third quarters of 1999. The
Company presently believes that with these conversions, upgrades and remediation
efforts, all significant Year 2000 Issues related to the Company's IT and non-IT
systems will be addressed.
14
<PAGE> 16
As part of the Year 2000 project, the Company is 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. 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 internal and external resources
for the assessment, remediation and testing of its systems. As of December 31,
1998, approximately $3.5 million has been expensed for external resources used
for the Year 2000 project. The total expense for external resources is estimated
to be $10 million to $12 million. The cost of internal resources are aggregated
with the Company's information technology cost centers. Total costs of the Year
2000 project are 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 IT and non-IT
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 the third parties, the Company
believes that the reasonably likely worst case scenario is that some of the
Company's vendors and customers will not be compliant. The Company believes that
the number of such third parties will have been minimized by the Company's
program of contacting significant vendors and large customers. However, 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 has not yet completed its planning and
preparation to handle the most reasonably likely worst case scenarios described
above. The Company is in the process of 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. 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 primarily related to making internal information systems
modifications to meet customer invoicing 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. 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.
15
<PAGE> 17
LEGAL REGULATIONS AND UNION RELATIONSHIPS
The temporary employment services industry is closely regulated in all of the
major markets in which the Company operates except the United States and Canada.
In addition to licensing or registration requirements, many countries impose
substantive restrictions on temporary employment services, either on the
temporary staffing company or the ultimate client company. They may restrict the
length of temporary assignments, the type of work permitted for temporary
workers or the occasions on which temporary workers may be used. Changes in
applicable laws or regulations have occurred in the past and are expected in the
future to affect the extent to which temporary employment services firms may
operate. These changes could impose additional costs or taxes, additional record
keeping or reporting requirements; restrict the tasks to which temporaries may
be assigned; limit the duration of or otherwise impose restrictions on the
nature of the temporary relationship (with the Company or the client) or
otherwise adversely affect the industry.
In many markets, the existence or absence of collective bargaining
agreements with labor organizations has a significant impact on the Company's
operations and the ability of customers to utilize the Company's services. In
some markets, labor agreements are structured on a national or industry-wide
(rather than a company) basis. Changes in these collective labor agreements have
occurred in the past and are expected in the future and may have a material
impact on the operations of temporary staffing firms, including the Company.
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.
16
<PAGE> 18
ACCOUNTING CHANGES
In the first quarter of 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement establishes standards for the reporting
and display of comprehensive income and its components in the financial
statements. The adoption of this statement had no impact on net earnings or
total stockholders' equity.
In the fourth quarter of 1998, the Company adopted SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information" and SFAS
No. 132, "Employers" Disclosures about Pensions and Other Postretirement
Benefits." As such, all segment and retirement plan disclosures have been
revised in accordance with these statements.
During 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.
During 1998, the American Institute of Certified Public Accountants
('AICPA') issued Statement of Position ('SOP') 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 will not have a material impact
on the Consolidated Financial Statements.
During 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-up
Activities." This statement is effective for the Company beginning in 1999 and
will not have a material impact on the Consolidated Financial Statements.
17
<PAGE> 19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Manpower Inc.:
We have audited the accompanying consolidated balance sheets of Manpower Inc. (a
Wisconsin corporation) and subsidiaries as of December 31, 1998 and 1997, and
the related consolidated statements of operations, cash flows and stockholders'
equity for each of the three years in the period ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Manpower
Inc. and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 29, 1999.
18
<PAGE> 20
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1998 1997 1996
- ---------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Revenues from services $ 8,814,272 $ 7,258,504 $ 6,079,905
Cost of services 7,311,278 5,948,308 4,931,937
----------- ----------- ------------
Gross profit 1,502,994 1,310,196 1,147,968
Selling and administrative expenses 1,280,491 1,054,809 921,011
Write-down of capitalized software 92,100 -- --
----------- ----------- ------------
Operating profit 130,403 255,387 226,957
Interest and other (expense) income (16,633) (6,179) 15,355
----------- ----------- ------------
Earnings before income taxes 113,770 249,208 242,312
Provision for income taxes 38,106 85,328 80,014
----------- ----------- ------------
Net earnings $ 75,664 $ 163,880 $ 162,298
=========== =========== ============
Net earnings per share $ .94 $ 2.01 $ 1.98
=========== =========== ============
Net earnings per share - diluted $ .93 $ 1.97 $ 1.94
=========== =========== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
SUPPLEMENTAL SYSTEMWIDE INFORMATION
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1998 1997 1996
- ---------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Systemwide sales $10,523,377 $ 8,899,946 $ 7,506,313
=========== =========== ===========
Systemwide offices at year end 3,189 2,776 2,519
=========== =========== ===========
</TABLE>
Systemwide information represents total of Company-owned branches and
franchises.
19
<PAGE> 21
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31 1998 1997
- ----------- ---------- ----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 180,456 $ 142,246
Accounts receivable, less allowance
for doubtful accounts of $39,504
and $38,019, respectively 1,674,729 1,437,378
Prepaid expenses and other assets 53,565 60,164
Future income tax benefits 52,812 47,113
---------- ----------
Total current assets 1,961,562 1,686,901
Other Assets:
Investments in licensees 33,055 32,763
Other assets 195,223 190,990
---------- ----------
Total other assets 228,278 223,753
Property and Equipment:
Land, buildings, leasehold improvements
and equipment 411,391 324,770
Less: accumulated depreciation and amortization 220,131 188,394
---------- ----------
Net property and equipment 191,260 136,376
---------- ----------
Total assets $2,381,100 $2,047,030
========== ==========
</TABLE>
20
<PAGE> 22
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31 1998 1997
- ----------- ----------- -----------
<S> <C> <C>
Current Liabilities:
Payable to banks $ 99,268 $ 69,848
Accounts payable 347,864 271,064
Employee compensation payable 77,084 68,416
Accrued liabilities 154,428 108,615
Accrued payroll taxes and insurance 319,053 248,605
Value added taxes payable 291,720 223,538
Income taxes payable 17,563 13,303
Current maturities of long-term debt 4,076 1,288
----------- -----------
Total current liabilities 1,311,056 1,004,677
Other Liabilities:
Long-term debt 154,594 189,785
Other long-term liabilities 246,512 235,005
----------- -----------
Total other liabilities 401,106 424,790
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 83,279,149 and 82,778,873 shares, respectively 833 828
Capital in excess of par value 1,602,721 1,590,704
Accumulated deficit (787,699) (848,195)
Accumulated other comprehensive loss (17,895) (40,688)
Treasury stock at cost, 4,349,400 and 2,432,400 shares, respectively (129,022) (85,086)
----------- -----------
Total stockholders' equity 668,938 617,563
----------- -----------
Total liabilities and stockholders' equity $ 2,381,100 $ 2,047,030
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.
21
<PAGE> 23
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1998 1997 1996
- ---------------------- --------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 75,664 $ 163,880 $ 162,298
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Write-down of capitalized software 92,100 -- --
Depreciation and amortization 55,550 41,623 35,618
Deferred income taxes (37,453) 1,959 (11,405)
Provision for doubtful accounts 11,986 15,884 12,360
Gain on sale of securities -- -- (15,509)
Change in operating assets and liabilities:
Sale of accounts receivable 175,000 -- --
Accounts receivable, net of sale (353,205) (398,825) (168,735)
Other assets 20,104 (20,177) (11,969)
Other liabilities 225,423 220,913 90,087
--------- --------- ---------
Cash provided by operating activities 265,169 25,257 92,745
--------- --------- ---------
Cash Flows from Investing Activities:
Capital expenditures (140,753) (98,592) (55,119)
Acquisitions of businesses, net of cash acquired (31,731) (16,480) (32,362)
Proceeds from the sale of property and equipment 992 2,858 1,669
Proceeds from sale of securities -- -- 18,440
--------- --------- ---------
Cash used by investing activities (171,492) (112,214) (67,372)
--------- --------- ---------
Cash Flows from Financing Activities:
Net change in payable to banks 23,136 50,079 (11,124)
Proceeds from long-term debt 22,719 90,245 57,681
Repayment of long-term debt (55,652) (2,503) (17,051)
Proceeds from stock option and purchase plans 12,022 10,842 9,871
Repurchase of common stock (43,936) (81,856) (3,230)
Dividends paid (15,168) (13,845) (12,305)
--------- --------- ---------
Cash (used) provided by financing activities (56,879) 52,962 23,842
--------- --------- ---------
Effect of exchange rate changes on cash 1,412 (4,312) (11,435)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 38,210 (38,307) 37,780
Cash and cash equivalents, beginning of year 142,246 180,553 142,773
--------- --------- ---------
Cash and cash equivalents, end of year $ 180,456 $ 142,246 $ 180,553
========= ========= =========
Supplemental Cash Flow Information:
Interest paid $ 18,941 $ 11,260 $ 7,119
========= ========= =========
Income taxes paid $ 68,998 $ 92,784 $ 79,230
========= ========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
22
<PAGE> 24
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except per share data)
<TABLE>
<CAPTION>
Accumulated
Capital in Other
Common Excess of Par Accumulated Comprehensive Treasury
Stock Value Deficit Income (Loss) Stock Total
----------- ------------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ 812 $ 1,564,305 $(1,148,223) $ 38,099 $ $ 454,993
Comprehensive income:
Net earnings 162,298
Foreign currency translation (16,623)
Total comprehensive income 145,675
Issuances under option and
purchase plans 6 9,865 9,871
Dividends ($.15 per share) (12,305) (12,305)
Repurchase of common stock (3,230) (3,230)
Issuances for acquisitions and other 4 5,698 5,702
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 822 1,579,868 (998,230) 21,476 (3,230) 600,706
Comprehensive income:
Net earnings 163,880
Foreign currency translation (62,164)
Total comprehensive income 101,716
Issuances under option and
purchase plans 6 10,836 10,842
Dividends ($.17 per share) (13,845) (13,845)
Repurchase of common stock (81,856) (81,856)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 828 1,590,704 (848,195) (40,688) (85,086) 617,563
Comprehensive income:
Net earnings 75,664
Foreign currency translation 22,793
Total comprehensive income 98,457
Issuances under option and
purchase plans 5 12,017 12,022
Dividends ($.19 per share) (15,168) (15,168)
Repurchase of common stock (43,936) (43,936)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 $ 833 $ 1,602,721 $ (787,699) $ (17,895) $ (129,022) $ 668,938
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
23
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Manpower Inc. (the "Company") is an employment services organization with over
3,100 systemwide offices in 50 countries. The Company's largest operations,
based on revenues, are located in the United States, France and the United
Kingdom. The Company's employment services include temporary help, contract
services and training and testing of temporary and permanent workers. The
Company provides employment services to a wide variety of customers, none of
which individually comprise a significant portion of revenues within a given
geographic region or for the Company as a whole.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
all subsidiaries. For subsidiaries in which the Company has an ownership
interest of 50% or less, but more than 20%, the consolidated financial
statements reflect the Company's ownership share of those earnings using the
equity method of accounting. These investments are included as Investments in
licensees in the Consolidated Balance Sheets. Included in stockholders' equity
at December 31, 1998 are $28,077 of unremitted earnings from investments
accounted for using the equity method. All significant intercompany accounts and
transactions have been eliminated in consolidation.
REVENUES
The Company generates revenues from sales of services by its own branch
operations and from fees earned on sales of services by its franchise
operations. Franchise fees, which are included in revenues from services, were
$37,781, $37,453 and $34,653 for the years ended December 31, 1998, 1997 and
1996, respectively.
FOREIGN CURRENCY TRANSLATION
The financial statements of the Company's non-U.S. subsidiaries have been
translated in accordance with Statement of Financial Accounting Standards
("SFAS") No. 52. Under SFAS No. 52, asset and liability accounts are translated
at the current exchange rate and income statement items are translated at the
weighted average exchange rate for the year. The resulting translation
adjustments are recorded as Accumulated other comprehensive loss, which is a
component of stockholders' Equity.
Translation adjustments for those operations in highly inflationary
economies and certain other transaction adjustments are included in earnings.
CAPITALIZED SOFTWARE
The Company capitalizes purchased software as well as internally developed
software. Internal software development costs are capitalized from the time the
internal use software is considered probable of completion until the software is
ready for use. Business analysis, system evaluation, selection and software
maintenance costs are expensed as incurred. Capitalized software costs are
amortized using the straight-line method over the estimated useful life of the
software. The Company regularly reviews the carrying value of all capitalized
software and recognizes a loss when the carrying value is considered
unrealizable. See Note 2 to the Consolidated Financial Statements for further
information.
During 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 will not have a material impact on the
Consolidated Financial Statements.
INTANGIBLE ASSETS
Intangible assets consist primarily of trademarks and the excess of cost over
the fair value of net assets acquired. Trademarks are amortized on a
straight-line basis over their useful lives. The excess of cost over the fair
value of net assets acquired is amortized on a straight-line basis over its
useful life, estimated based on the facts and circumstances surrounding each
individual acquisition, not to exceed twenty years. The intangible asset and
related accumulated amortization are removed from the Consolidated Balance
Sheets when the intangible asset becomes fully amortized. The Company regularly
reviews the carrying value of all intangible assets and recognizes a loss when
the unamortized balance is considered unrealizable. Total intangible assets of
$84,289 and $53,127, net of accumulated amortization of $12,812 and $7,612 at
December 31, 1998 and 1997, respectively, are included in Other assets in the
Consolidated Balance Sheets. Amortization expense was $5,430, $4,360, and $3,780
in 1998, 1997 and 1996, respectively.
24
<PAGE> 26
PROPERTY AND EQUIPMENT
A summary of property and equipment at December 31 is as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Land $ 1,351 $ 1,221
Buildings 19,824 16,620
Office furniture and equipment 261,113 209,571
Leasehold improvements 129,103 97,358
-------- --------
$411,391 $324,770
======== ========
</TABLE>
Property and equipment are stated at cost and depreciated using the
straight-line method over the following estimated useful lives: buildings - up
to 40 years; leasehold improvements - lesser of life of asset or lease term;
furniture and equipment - 3 to 10 years. Expenditures for renewals and
betterments are capitalized whereas expenditures for repairs and maintenance are
charged to income as incurred. Upon sale or disposition of properties, the
difference between unamortized cost and the proceeds is charged or credited to
income.
STOCKHOLDERS' EQUITY
During the first quarter of 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement established standards for the reporting
and display of comprehensive income and its components. The adoption of this
statement had no impact on net earnings or total stockholders' equity.
Comprehensive income consists of net earnings and foreign currency translation
adjustments and is presented in the Consolidated Statements of stockholders'
Equity. Prior year financial statements have been reclassified to conform to
these requirements.
In October of 1998, the Board of Directors authorized an additional ten
million shares for repurchase under the Company's share repurchase program.
Stock repurchases may be made from time to time and may be implemented through
a variety of methods, including open market purchases, block transactions,
privately negotiated transactions, accelerated share repurchase programs,
forward repurchase agreements or similar facilities. This additional
authorization increases the total number of shares that may be repurchased to
fifteen million shares. At December 31, 1998, 4.3 million shares at a cost of
$129,022 have been repurchased under the program.
ADVERTISING COSTS
The Company generally expenses production costs of media advertising as they are
incurred. Advertising expenses, including the sponsorship of the 1998 World Cup,
were $41,700, $21,600 and $24,300 in 1998, 1997 and 1996, respectively.
STATEMENT OF CASH FLOWS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
RECLASSIFICATIONS
Certain amounts in the 1997 and 1996 financial statements have been reclassified
to be consistent with the current year presentation.
(2) WRITE-DOWN OF CAPITALIZED SOFTWARE
In accordance with its ongoing review of capitalized software, in December 1998
the Company recorded a $92,100 ($57,102 after tax, or $.70 per share on a
diluted basis) non-cash charge to write off the carrying value of software costs
and certain hardware and network infrastructure costs related to the development
of a complex and proprietary information system for its North American branch
office administration, invoicing and payroll processing. This comprehensive
information system had been under development for several years and portions of
the system were in field testing and deployment.
After a period of field testing, management and the Board of Directors
decided in December 1998 that it was necessary to significantly alter the
technological architecture of the system in order to reduce ongoing support,
maintenance and communications costs. This decision requires the application
software under development to be
25
<PAGE> 27
abandoned and a new application to be purchased or developed for the new
architecture. In addition to the developed software, certain hardware, network
infrastructure and software licenses were also abandoned as a result of the
change in system architecture. The non-cash charge includes the costs of
abandoning all of these assets.
The capitalized software balance of $9,580 and $53,490 as of December 31,
1998 and 1997, respectively, is included in Other assets in the Consolidated
Balance Sheets.
(3) ACCOUNTS RECEIVABLE SECURITIZATION
In December 1998, a wholly-owned subsidiary of the Company entered into an
agreement to sell, on an ongoing basis, up to $200,000 of an undivided interest
in its accounts receivable. The amount of receivables sold under this agreement
totaled $175,000 at December 31, 1998. Costs of the program, which primarily
consist of the purchasers' financing and administrative costs, were $658 in 1998
and are included in Interest and other expenses in the accompanying Consolidated
Statements of Operations.
The Company continues to service the receivables and maintains an allowance
for doubtful accounts based upon the expected collectibility of all Company
accounts receivable, including the portion of receivables sold. Unless extended
by amendment, the agreement expires in December 1999.
(4) EARNINGS PER SHARE
The calculation of net earnings per share for the years ended December 31, 1998,
1997 and 1996, is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- --------- ---------
<S> <C> <C> <C>
Net earnings per share:
Net earnings available to
common stockholders $75,664 $ 163,880 $ 162,298
Weighted average
common shares outstanding 80,101 81,597 81,820
------- --------- ---------
$ .94 $ 2.01 $ 1.98
======= ========= =========
</TABLE>
The calculation of net earnings per share - diluted for the years ended
December 31, 1998, 1997 and 1996, is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net earnings per share - diluted:
Net earnings available to
common shareholders $ 75,664 $163,880 $162,298
Weighted average common
shares outstanding 80,101 81,597 81,820
Effect of dilutive securities-
Stock options 1,095 1,783 1,749
-------- -------- --------
81,196 83,380 83,569
-------- -------- --------
$ .93 $ 1.97 $ 1.94
======== ======== ========
</TABLE>
The calculation of net earnings per share - diluted for the years ended
December 31, 1998, 1997 and 1996 does not include certain stock option grants
because the exercise price for these options is greater than the average market
price of the common shares during that year. The number, exercise prices and
weighted average remaining life of these antidilutive options is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Shares 625,399 10,000 205,500
Exercise prices 32.00-48.63 48.63 33.88-36.88
Weighted average remaining life 8.1 years 9.6 years 8.1 years
----------- --------- -----------
</TABLE>
(5) INCOME TAXES
The provision for income taxes consists of:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- ---------
<S> <C> <C> <C>
Current:
United States
Federal $ 9,878 $ 14,410 $ 19,309
State 3,266 2,133 4,312
Foreign 62,415 66,826 67,798
-------- -------- ---------
Total current 75,559 83,369 91,419
-------- -------- ---------
Deferred:
United States
Federal (21,342) 13,984 2,103
State (3,662) 803 676
Foreign (12,449) (12,828) (14,184)
-------- -------- ---------
Total deferred (37,453) 1,959 (11,405)
-------- -------- ---------
Total provision $ 38,106 $ 85,328 $ 80,014
======== ======== ========
</TABLE>
26
<PAGE> 28
A reconciliation between taxes computed at the United States Federal
statutory tax rate of 35% and the consolidated effective tax rate is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Income tax based on statutory rate $ 39,820 $ 87,223 $ 84,809
Increase (decrease) resulting from:
Foreign tax rate differences 3,153 2,271 710
State income taxes (391) 2,936 2,803
Change in valuation reserve (7,557) (3,611) (6,231)
Other, net 3,081 (3,491) (2,077)
-------- -------- --------
Total provision $ 38,106 $ 85,328 $ 80,014
======== ======== ========
</TABLE>
Deferred income taxes are recorded on temporary differences at the tax rate
expected to be in effect when the temporary differences reverse. Temporary
differences which gave rise to the deferred tax assets at December 31 are as
follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Current future income tax benefits:
Accrued payroll taxes and insurance $ 18,729 $ 17,041
Employee compensation payable 11,853 11,266
Other 24,771 21,296
Valuation allowance (2,541) (2,490)
-------- --------
52,812 47,113
-------- --------
Noncurrent future income tax benefits:
Accrued payroll taxes and insurance 24,700 24,700
Pension and postretirement benefits 16,640 14,864
Net operating losses and other 42,455 23,282
Valuation allowance (18,350) (25,958)
-------- --------
65,445 36,888
-------- --------
Total future tax benefits $118,257 $ 84,001
======== ========
</TABLE>
Noncurrent future income tax benefits have been classified as Other assets
in the Consolidated Balance Sheets.
The Company has U.S. Federal and foreign net operating loss carryforwards
totaling $34,573 that expire as follows: 1999 - $221, 2000 - $251, 2001 - $470,
2002 - $166, 2003 - $466, 2004 and thereafter - $21,571 and $11,428 with no
expiration. The Company has U.S. State net operating loss carryforwards totaling
$199,708 that expire as follows: 2002 - $10,387, 2003 - $80,599, 2004 and
thereafter - $108,722. The Company has recorded a deferred tax asset of $27,890
for the benefit of these net operating losses. Realization of this asset is
dependent on generating sufficient taxable income prior to the expiration of the
loss carryforwards. A valuation allowance of $17,213 has been recorded as
management believes that realization of certain loss carryforwards is unlikely.
Pretax income of foreign operations was $145,185, $166,920 and $164,023 in
1998, 1997 and 1996, respectively. United States income taxes have not been
provided on undistributed earnings of foreign subsidiaries which are considered
to be permanently invested. If such earnings were remitted, foreign tax credits
would substantially offset any resulting United States income tax. At December
31, 1998, the estimated amount of unremitted earnings of the foreign
subsidiaries totaled $519,100.
(6) PAYABLE TO BANKS AND BANK LINES OF CREDIT
Information concerning short-term borrowings at December 31 is as follows:
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Payable to banks $ 99,268 $ 69,848
Average interest rates 3.5% 3.6%
</TABLE>
The Company and some of its foreign subsidiaries maintain lines of credit
with foreign financial institutions to meet short-term working capital needs.
Such lines totaled $174,739 at December 31, 1998, of which $75,471 was unused.
The Company has no significant compensating balance requirements or commitment
fees related to these lines.
(7) LONG-TERM DEBT
A summary of long-term debt at December 31 is as follows:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Commercial paper, maturing within 90 days,
at average interest rates of 5.5% and 6.0%,
respectively $ 71,949 $ 55,433
Revolving credit agreement -
U.S. dollar denominated borrowings,
at a rate of 5.8% and 6.2%, respectively 40,000 110,000
Yen denominated borrowings, at a rate of .6% 35,281 21,244
Other 11,440 4,396
--------- ---------
158,670 191,073
Less-Current maturities (4,076) (1,288)
--------- ---------
Long-term debt $ 154,594 $ 189,785
========= =========
</TABLE>
27
<PAGE> 29
The Company has a $415,000 unsecured revolving credit agreement which
allows for borrowings in various currencies and includes a $90,000 commitment to
be used exclusively for standby letters of credit. Outstanding letters of credit
totaled $48,217 and $60,000 as of December 31, 1998 and 1997, respectively.
Approximately $203,000 of additional borrowings were available to the Company
under this agreement at December 31, 1998.
The interest rate and facility fee on the entire line and the issuance fee
on the letter of credit commitment vary based on the Company's debt rating and
borrowing level. Currently, the interest rate is LIBOR plus .215%, and the fees
are .11% and .365%, respectively. The facility matures on November 25, 2002, and
may be increased to a maximum of $500,000 or extended for an additional year
with the lenders' consent. The agreement requires, among other things, that the
Company comply with minimum interest coverage and debt-to-capitalization ratios
and a maximum subsidiary debt level.
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. The fair value of
this agreement and the impact on the interest expense recorded during 1998 were
not material.
Due to the availability of long-term financing, commercial paper borrowings
have been classified as long-term debt. The carrying value of long-term debt
approximates fair value.
The maturities of long-term debt payable within each of the four years
subsequent to December 31, 1999 are as follows: 2000 - $3,829, 2001 - $1,929,
2002 - $148,289 and 2003 - $547.
(8) STOCK COMPENSATION PLANS
The Company accounts for its stock-based compensation plans in accordance with
APB Opinion No. 25 and related Interpretations. Accordingly, no compensation
cost related to these plans was charged against earnings in 1998, 1997 and 1996.
Had the Company determined compensation cost based on the fair value of the
stock options at the grant date, consistent with the method of SFAS No. 123, the
Company's net earnings and net earnings per share would have been reduced to the
pro forma amounts indicated as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- ---------- -----------
<S> <C> <C> <C>
Net earnings:
as reported $ 75,664 $ 163,880 $ 162,298
pro forma 74,378 162,526 160,582
Net earnings per share:
as reported $ .94 $ 2.01 $ 1.98
pro forma .93 1.99 1.96
Net earnings per share - diluted
as reported $ .93 $ 1.97 $ 1.94
pro forma .92 1.95 1.92
--------- ---------- -----------
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1998, 1997 and 1996, respectively: risk-free
interest rates of 4.5%, 5.8% and 6.2%; expected volatility of 24.4%, 14.4% and
17.3%; dividend yield of .5% in all years; and expected lives of 5.7 years, 5.0
years and 6.1 years. The weighted-average fair value of options granted was
$4.36, $5.48 and $7.13 in 1998, 1997 and 1996, respectively.
FIXED STOCK OPTION PLANS
The Company has reserved 5,625,000 shares of common stock for issuance under the
Executive Stock Option and Restricted Stock Plans. Under the plans, all
full-time employees of the Company are eligible to receive stock options,
purchase rights and restricted stock. The options, rights and stock are granted
to eligible employees at the discretion of a committee appointed by the Board of
Directors. All options have generally been granted at a price equal to the fair
market value of the Company's common stock at the date of grant. The purchase
price per share pursuant to a purchase right is determined by the Board of
Directors. The committee also determines the period during which options and
rights are exercisable. Generally, options are granted with a vesting period of
up to five years and expire ten years from the date of grant. Rights may
generally be exercised for up to sixty days from the date of grant. Under the
plans, the committee may also authorize the granting of stock appreciation
rights and cash equivalent rights in conjunction with the stock options and
purchase rights, respectively. As of December 31, 1998, no purchase rights,
stock appreciation rights or cash equivalent rights had been granted.
28
<PAGE> 30
The Company has reserved 800,000 shares of common stock for issuances under
the 1991 Directors Stock Option Plan. Under the plan, each non-employee director
of the Company may receive an option to purchase shares of the Company's common
stock in lieu of cash compensation. The number of shares covered by the option
is determined pursuant to a formula set forth in the plan. The per share
purchase price for each option awarded is equal to the fair market value of the
Company's common stock at the date of grant. Options are exercisable for the
vested portion during the director's tenure and a limited period thereafter.
The Company also has the Savings Related Share Option Scheme for United
Kingdom employees with at least one year of service. These employees are offered
the opportunity to obtain an option for a specified number of shares of common
stock at not less than 85% of their market value on the day prior to the offer
to participate in the plan. Options vest after either 3, 5, or 7 years, but may
lapse earlier. Funds used to purchase the shares are accumulated through
specified payroll deductions over a 60-month period.
Information related to options outstanding under the plans, and the related
weighted-average exercise prices, is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ----------------- -----------------
Shares Shares Shares
(000) Price (000) Price (000) Price
----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Options
outstanding,
beginning
of period 3,362 $ 21 3,421 $ 19 3,369 $ 16
Granted 930 24 384 35 550 31
Exercised (237) 15 (374) 17 (472) 16
Expired or
cancelled (215) 35 (69) 24 (26) 24
----- ------ ----- ------ ----- ------
end of
period 3,840 $ 21 3,362 $ 21 3,421 $ 19
===== ====== ===== ====== ===== ======
Options
exercisable,
end of
period 2,354 $ 17 2,378 $ 16 2,659 $ 16
===== ====== ===== ====== ===== ======
</TABLE>
Options outstanding as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
--------------------------------- -------------------
Weighted-
average Weighted- Weighted-
remaining average average
Exercise Shares contractual exercise Shares exercise
prices (000) life price (000) price
-------- ------ ----------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
10.68-14.25 586 2.6 years $ 12 580 $$$12
15.00-19.76 1,507 4.6 years 16 1,397 16
22.19-28.00 1,102 9.0 years 24 245 27
30.13-35.25 401 8.2 years 33 89 33
36.38-48.63 244 8.0 years 38 43 38
----- ------ ----- ------
3,840 $ 21 2,354 $ 17
===== ====== ===== ======
</TABLE>
OTHER STOCK PLANS
The Company has reserved 2,250,000 shares of common stock for issuance under the
1990 Employee Stock Purchase Plan. Under the plan, designated Manpower employees
meeting certain service requirements may purchase shares of the Company's common
stock through payroll deductions. These shares may be purchased at the lesser of
85% of their fair market value at the beginning or end of each year. During
1998, 1997 and 1996, 155,475, 239,229 and 186,979 shares, respectively, were
purchased under the plan.
(9) RETIREMENT PLANS
DEFINED BENEFIT PLANS
The Company sponsors several qualified and nonqualified pension plans covering
substantially all permanent employees. The reconciliation of the changes in the
plans' benefit obligations and the fair value of plan assets and the statement
of the funded status of the plans are as follows:
29
<PAGE> 31
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
---------------------- ----------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation,
beginning of year $ 26,816 $ 24,198 $ 35,867 $ 30,937
Service cost 1,213 1,030 2,968 2,435
Interest cost 1,926 1,793 2,421 2,189
Actuarial loss 2,262 885 7,996 1,931
Plan participant contributions -- -- 924 743
Benefits paid (1,092) (1,090) (1,757) (641)
Currency exchange
rate changes -- -- 1,525 (1,727)
-------- -------- -------- --------
Benefit obligation, end of year 31,125 26,816 49,944 35,867
-------- -------- -------- --------
Change in plan assets:
Fair value of plan assets,
beginning of year 26,177 20,903 36,435 31,461
Actual return on plan assets 185 6,012 4,593 4,077
Plan participant contributions -- -- 924 743
Company contributions 460 352 2,806 2,228
Benefits paid (1,092) (1,090) (1,757) (641)
Currency exchange
rate changes -- -- 1,202 (1,433)
-------- -------- -------- --------
Fair value of plan assets,
end of year 25,730 26,177 44,203 36,435
-------- -------- -------- --------
Funded status:
Funded status of plan (5,395) (639) (5,741) 568
Unrecognized net
(gain) loss (3,588) (7,488) 6,707 121
Unrecognized prior
service cost -- -- 387 418
Unrecognized transitional
asset (655) (769) (65) (210)
-------- -------- -------- --------
Net amount recognized $ (9,638) $ (8,896) $ 1,288 $ 897
======== ======== ======== ========
Amounts recognized:
Prepaid benefit cost $ -- $ -- $ 3,882 $ 2,909
Accrued benefit liability (9,638) (8,896) (2,594) (2,012)
-------- -------- -------- --------
Net amount recognized $ (9,638) $ (8,896) $ 1,288 $ 897
======== ======== ======== ========
</TABLE>
The components of the net periodic benefit cost for all plans are as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost $ 4,181 $ 3,465 $ 2,969
Interest cost 4,347 3,982 3,575
Expected return on assets (4,897) (8,797) (5,022)
Amortization of:
unrecognized loss 10 4,442 1,061
unrecognized prior service cost 36 36 20
unrecognized transition asset (193) (193) (184)
------- ------- -------
Total benefit cost $ 3,484 $ 2,935 $ 2,419
======= ======= =======
</TABLE>
The weighted average assumptions used in the measurement of the benefit
obligation are as follows:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
-------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 6.75% 7.25% 5.5% 6.7%
Expected return on assets 8.5% 8.5% 6.8% 8.0%
Rate of compensation increase 6.0% 6.0% 4.2% 5.4%
</TABLE>
Projected salary levels utilized in the determination of the projected
benefit obligation for the pension plans are based upon historical experience.
The unrecognized transitional asset is being amortized over the estimated
remaining service lives of the employees. Plan assets are primarily comprised of
common stocks and U.S. government and agency securities.
RETIREE HEALTH CARE PLAN
The Company provides medical and dental benefits to eligible retired
employees in the United States. The reconciliation of the changes in the plan's
benefit obligation and the statement of the funded status of the plan are as
follows. Due to the nature of the plan, there are no plan assets.
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation, beginning of year $ 23,745 $ 19,773
Service cost 1,937 1,542
Interest cost 1,668 1,492
Actuarial loss 1,725 1,217
Benefits paid (230) (279)
-------- --------
Benefit obligation, end of year 28,845 23,745
-------- --------
Unrecognized net gain (loss) (195) 1,531
-------- --------
Accrued liability recognized $ 28,650 $ 25,276
======== ========
</TABLE>
The components of net periodic benefit cost for this plan are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost $ 1,937 $ 1,542 $ 1,276
Interest cost 1,668 1,492 1,339
Amortization of:
unrecognized gain -- (29) (27)
------- ------- -------
$ 3,605 $ 3,005 $ 2,588
======= ======= =======
</TABLE>
The discount rate used in the measurement of the benefit obligation was
6.75% in 1998 and 7.25% in 1997.
30
<PAGE> 32
The health care cost trend rate was assumed to be 7.5% for 1998 and
decreases gradually to 6% for the years 2001 and beyond. Assumed health care
cost trend rates have a significant effect on the amounts reported. A
one-percentage point change in the assumed health care cost trend rate would
have the following effects:
<TABLE>
<CAPTION>
1% increase 1% decrease
----------- -----------
<S> <C> <C>
Effect on total of service and
interest cost components $ 855 $ (685)
Effect on postretirement
benefit obligation $ 6,035 $(4,926)
</TABLE>
DEFINED CONTRIBUTION PLANS
The Company has defined contribution plans covering substantially all permanent
U.S. employees. Under the plans, employees may elect to contribute a portion of
their salary to the plans. The Company, at its discretion, may match a portion
of the employees' contributions. During 1998 and 1997 the Company elected to
match a portion of employees' contributions if a targeted earnings level was
reached in the U.S. The total 1998 and 1997 expense was $350 and $296,
respectively. The Company elected not to provide a matching contribution in
1996.
(10) LEASES
The Company leases property and equipment primarily under operating leases.
Renewal options exist for substantially all leases.
Future minimum payments, by year and in the aggregate, under noncancelable
operating leases with initial or remaining terms of one year or more consist of
the following at December 31, 1998:
<TABLE>
<CAPTION>
Year
- ----
<S> <C>
1999 $ 63,294
2000 50,486
2001 41,004
2002 33,647
2003 28,687
Thereafter 83,334
--------
Total minimum lease payments $300,452
========
</TABLE>
Rental expense for all operating leases was $91,758, $72,196 and $67,198
for the years ended December 31, 1998, 1997 and 1996, respectively.
(11) INTEREST AND OTHER (EXPENSE) INCOME
Interest and other (expense) income consists of the following:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Interest expense $(19,155) $(11,105) $ (6,388)
Interest income 8,379 8,052 7,294
Gain on sale of securities -- -- 15,509
Foreign exchange losses (2,425) (1,258) (941)
Miscellaneous, net (3,432) (1,868) (119)
-------- -------- --------
Interest and other (expense) income $(16,633) $ (6,179) $ 15,355
======== ======== ========
</TABLE>
During 1996 the Company recorded gains of $15.5 million related to the sale
of its interest in two non-Manpower brand subsidiaries in the United Kingdom.
Total cash proceeds received from the equity interests and a note receivable was
$18.4 million. The Company had previously deferred recognition of most of the
equity interests and the note due to uncertainties regarding their eventual
realization.
(12) ACQUISITIONS OF BUSINESSES
From time to time, the Company acquires certain franchises and unrelated
companies throughout the world. In 1996, the Company acquired A Teamwork Sverige
AB, the largest employment services organization in Sweden, and certain
franchises in the United States, Canada and Spain. The Consolidated Financial
Statements include the operating results of each business from the date of
acquisition. Pro forma results of operations have not been presented because the
effect of these acquisitions was not significant individually or in the
aggregate. The total consideration for these acquisitions was $32,451, $17,601
and $41,072 in 1998, 1997 and 1996, respectively, the majority of which was
recorded as intangible assets.
(13) CONTINGENCIES
The Company is involved in a number of lawsuits arising in the ordinary
course of business which will not, in the opinion of management, have a material
effect on the financial condition of the Company.
31
<PAGE> 33
(14) BUSINESS SEGMENT DATA BY GEOGRAPHICAL AREA
During 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," and as such, the following segment
information has been restated to be in accordance with this Statement.
The Company is organized and managed on a geographical basis. Each country
has its own distinct operations, is managed locally by its own management team,
and maintains its own financial reports. The Company has three reportable
segments - the United States, France and the United Kingdom. All remaining
countries have been classified into two segments - Other Europe and Other
Countries. None of these other countries has ever met the quantitative
thresholds for determining reportable segments.
Each segment derives at least 98% of its revenues from the placement of
temporary help. The remaining revenues are derived from other employment
services, including contract services and training and testing of temporary and
permanent workers. Segment revenues represent sales to external customers within
a single country. Due to the nature of its business, the Company does not have
export or intersegment sales. The Company provides employment services to a wide
variety of customers, none of which individually comprise a significant portion
of revenues within a reporting segment, geographic region or for the Company as
a whole.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based on Operating Unit Profit, which is equal to segment revenues
less direct costs and branch and national head office operating costs. This
profit measure does not include nonrecurring losses, goodwill amortization,
interest and other income and expense amounts or income taxes. Total assets and
net assets for the segments are reported after the elimination of Investments in
subsidiaries and Intercompany accounts.
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues from services:
United States (a) $ 2,152,822 $ 1,993,665 $ 1,774,240
Foreign:
France 3,639,483 2,716,683 2,274,761
United Kingdom 1,088,218 989,104 867,884
Other Europe 1,152,574 855,372 678,337
Other Countries 781,175 703,680 484,683
----------- ----------- -----------
Total foreign 6,661,450 5,264,839 4,305,665
----------- ----------- -----------
$ 8,814,272 $ 7,258,504 $ 6,079,905
=========== =========== ===========
Operating Unit Profit:
United States $ 78,005 $ 92,607 $ 88,165
France 76,959 91,246 73,688
United Kingdom 42,280 39,831 33,246
Other Europe 49,197 38,811 38,440
Other Countries 20,953 30,744 22,452
Unallocated amounts -
Write-down of
capitalized software (b) (92,100) -- --
Corporate expenses (39,461) (33,492) (25,254)
Amortization of
intangible assets (5,430) (4,360) (3,780)
Interest and other
(expense) income (16,633) (6,179) 15,355
----------- ----------- -----------
Earnings before
income taxes $ 113,770 $ 249,208 $ 242,312
=========== =========== ===========
Depreciation and
amortization expense:
United States $ 14,359 $ 10,911 $ 9,089
France 12,527 9,958 9,422
United Kingdom 8,083 6,796 5,293
Other Europe 9,043 5,889 4,996
Other Countries 4,319 2,892 1,988
----------- ----------- -----------
$ 48,331 $ 36,446 $ 30,788
=========== =========== ===========
Earnings from investments
in licensees:
United States $ 195 $ 277 $ 204
Other Europe 1,409 1,969 236
Other Countries 908 627 491
----------- ----------- -----------
$ 2,512 $ 2,873 $ 931
=========== =========== ===========
Total assets:
United States $ 275,158 $ 431,938 $ 371,095
France 1,128,259 871,258 724,043
United Kingdom 230,248 201,895 188,057
Other Europe 427,590 307,253 263,291
Other Countries 253,291 190,197 147,706
Corporate (c) 66,554 44,489 58,071
----------- ----------- -----------
$ 2,381,100 $ 2,047,030 $ 1,752,263
=========== =========== ===========
</TABLE>
32
<PAGE> 34
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Investments in licensees:
United States $ 492 $ 307 $ 188
Other Europe 31,463 30,057 28,485
Other Countries 1,100 2,399 736
-------- -------- --------
$ 33,055 $ 32,763 $ 29,409
======== ======== ========
Long-lived assets:
United States (b) $ 84,303 $107,345 $ 77,026
Foreign:
France 70,040 45,262 45,332
United Kingdom 31,157 29,421 26,960
Other Europe 80,769 59,560 57,394
Other Countries 48,172 38,624 19,274
-------- -------- --------
Total foreign 230,138 172,867 148,960
-------- -------- --------
Corporate (c) 6,216 6,408 5,719
-------- -------- --------
$320,657 $286,620 $231,705
======== ======== ========
Additions to long-lived
assets:
United States $ 76,461 $ 44,496 $ 54,304
France 34,043 18,282 7,205
United Kingdom 10,213 11,235 8,294
Other Europe 32,677 18,467 51,737
Other Countries 28,098 24,040 3,265
Corporate (c) 20 2,170 4,992
-------- -------- --------
$181,512 $118,690 $129,797
======== ======== ========
Net assets:
United States $ 49,483 $112,360 $144,278
France 359,719 295,146 279,480
United Kingdom 77,315 77,564 63,996
Other Europe 101,011 80,932 77,199
Other Countries 81,410 51,561 35,753
-------- -------- --------
$668,938 $617,563 $600,706
======== ======== ========
</TABLE>
(a) Total systemwide sales in the United States, which include sales of
Company-owned branches and franchises, were $3,577,192, $3,340,212 and
$2,938,926 for the years ended December 31, 1998, 1997 and 1996, respectively.
(b) The write-down of capitalized software relates to the abandonment of an
information system that was being developed in the U.S. See Note 2 to the
Consolidated Financial Statements for further information.
(c) Corporate assets include assets that are not used in the operations of
any geographical segment.
33
<PAGE> 35
QUARTERLY DATA (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
---------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1998
Revenues from services $1,872,866 $2,136,103 $2,377,750 $ 2,427,553 $ 8,814,272
Gross profit 327,358 360,385 398,102 417,149 1,502,994
Net earnings (loss) 21,690 26,172 42,922 (15,120) 75,664
Net earnings (loss) per share $ .27 $ .32 $ .54 $ (.19) $ .94
Net earnings (loss) per share - diluted $ .26 $ .32 $ .53 $ (.19) $ .93
Dividends per share $ -- $ .09 $ -- $ .10 $ .19
Market price-
High $ 42 9/16 $ 44 7/8 $ 30 1/8 $ 27 7/16
Low 33 5/8 27 11/16 20 19 3/8
Year Ended December 31, 1997
Revenues from services $1,521,002 $1,792,216 $1,973,020 $ 1,972,266 $ 7,258,504
Gross profit 276,655 319,150 350,930 363,461 1,310,196
Net earnings 26,599 40,892 52,691 43,698 163,880
Net earnings per share $ .32 $ .50 $ .64 $ .54 $ 2.01
Net earnings per share - diluted $ .32 $ .49 $ .63 $ .53 $ 1.97
Dividends per share $ -- $ .08 $ -- $ .09 $ .17
Market price-
High $ 40 1/2 $ 49 $ 50 3/8 $ 40 3/4
Low 29 1/2 35 1/4 37 35 1/4
</TABLE>
34
<PAGE> 36
SELECTED FINANCIAL DATA
(in millions, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1998 1997 1996 1995 1994
- ---------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operations Data
Revenues from services $ 8,814.3 $ 7,258.5 $ 6,079.9 $ 5,484.2 $ 4,296.4
Gross profit 1,503.0 1,310.2 1,148.0 1,000.8 796.6
Write-down of capitalized software (92.1) -- -- -- --
Operating profit 130.4 255.4 227.0 211.7 151.7
Net earnings 75.7 163.9 162.3 128.0 83.9
Per Share Data
Net earnings $ .94 $ 2.01 $ 1.98 $ 1.68 $ 1.14
Net earnings - diluted .93 1.97 1.94 1.59 1.09
Dividends .19 .17 .15 .13 .11
Balance Sheet Data
Total assets $ 2,381.1 $ 2,047.0 $ 1,752.3 $ 1,517.8 $ 1,191.2
Long-term debt 154.6 189.8 100.8 61.8 130.9
</TABLE>
The Notes to Consolidated Financial Statements should be read in conjunction
with the above summary, specifically Note 2 which discusses the write-down of
capitalized software.
35
<PAGE> 37
WORLD HEADQUARTERS
5301 North Ironwood Road
P.O. Box 2053
Milwaukee, Wisconsin 53201
(414) 961-1000
www.manpower.com
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C.
New York, New York
www.chasemellon.com
STOCK EXCHANGE LISTING
NYSE Symbol: MAN
10-K REPORT
A copy of Form 10-K filed with the Securities and Exchange Commission for
the year ended December 31, 1998 is available without charge after March
31, 1999 by writing to:
Michael J. Van Handel
Manpower Inc.
5301 North Ironwood Road
P.O. Box 2053
Milwaukee, Wisconsin 53201
ANNUAL MEETING OF STOCKHOLDERS
April 26, 1999 10:00 a.m.
Marcus Center for the
Performing Arts
929 North Water Street
Milwaukee, Wisconsin 53202
DIRECTORS
Mitchell S. Fromstein
Chairman of the Board,
President and
Chief Executive Officer
Dudley J. Godfrey, Jr.
Senior Partner
Godfrey & Kahn, S.C.
Marvin B. Goodman
Retired; former principal
shareholder and officer of
Manpower Services (Toronto)
Limited, a Company franchise
J. Ira Harris
Chairman of J.I. Harris & Associates
and Vice Chairman of The Pritzker
Organization, LLC
Newton N. Minow
Of Counsel and former partner
Sidley & Austin
Gilbert Palay
Retired; former Senior Executive
Vice President
Dennis Stevenson
Chairman of GPA Group plc and
Chairman of Pearson plc
John R. Walter
Retired President and
Chief Operating Officer of
AT&T Corporation
Terry A. Hueneke
Executive Vice President
OFFICERS
Mitchell S. Fromstein
Chairman of the Board,
President and
Chief Executive Officer
Terry A. Hueneke
Executive Vice President
Jeffrey A. Joerres
Senior Vice President,
European Operations -
Global Sales and Marketing
Michael J. Van Handel
Senior Vice President,
Chief Financial Officer,
Secretary and Treasurer
<PAGE> 38
PRINCIPAL OPERATING UNITS
Mitchell S. Fromstein
Chairman, President and CEO
THE AMERICAS, JAPAN,
AUSTRALIA AND THE FAR EAST
Terry A. Hueneke
Executive Vice President
5301 North Ironwood Road
P.O. Box 2053
Milwaukee, Wisconsin 53201
Melanie Holmes
Senior Vice President
Customer Services Group
Arthur David Keith
Senior Vice President
U.S. Operations, Manpower West
Maureen Quinn
Senior Vice President
U.S. Operations, Manpower East
Marion Aymie
Vice President
Human Resources
William L. Bates
Vice President
U.S. Administrative Services
Richard J. Gallagher
Vice President
U.S. National Accounts
Marnie M. Harris
Vice President
Business Development
James J. Katte
Vice President
North American Finance
Douglas H. Krueger
Vice President
North American Support Services
Kristin M. Maegli
Vice President
Financial Operations
William J. Pfannenstiel
Vice President
Technical Services
John K. Simon
Vice President
Franchise Center
Peter Stockhausen
Vice President
Chief Information Officer
David B. Wescoe
Vice President
North American Administration
U.S. General Counsel
Kay Livingston Ash
Vice President
Mountain Region
M. Elaine Brown
Vice President
South Central Region
Richard Cutshall
Vice President
Western Region
William Floyd
Vice President
Southwest Region
Donald Johnston
Vice President
East Central Region
Craig Kasper
Vice President
Upper Midwest Region
Martin Klein
Vice President
Philadelphia Region
Cathy-Ann Paige
Vice President
Northeast Region
Warren Rosenow
Vice President
Midwest Region
Louis Scrivani
Vice President
New Jersey Region
Betty Stockstill
Vice President
Gulf South Region
Beba Franco
General Manager
Puerto Rico
CANADA
5090 Explorer Drive, Suite 401
Mississauga, Ontario L4W 4X6
Tammy Johns
Chairman - Canadian Operations
MEXICO AND CENTRAL AMERICA
GUILLERMO SANCHEZ
GENERAL MANAGER
MEXICO
Louisiana No. 80
Col. Napoles
C.P. 03810, Mexico, DF
Guillermo Sanchez
General Manager
COSTA RICA
300 metros al Norte de la Fuente
de la Hispanidad
Edificio Equus. Planta Baja
San Jose de Costa Rica
GUATEMALA
6(a) Av. 0-60, Zona 4
Torre Profesional1, Oficina 304
Guatemala, C.A.
PANAMA
Bella Vista Calle 51
Edificio Margarita, Local N degree 6
Panama City, Republic of Panama
SOUTH AMERICA
HORACIO DE MARTINI
REGIONAL MANAGER
ARGENTINA
Maipu 942 - piso 23
1340 Buenos Aires
Horacio De Martini
President
Alfredo Fagalde
General Manager
BOLIVIA
Edif San Pablo, Piso 11, Ofc 1106
Av 16 de Julio, #1476
La Paz, Bolivia
<PAGE> 39
BRAZIL
Casa Central
Rua Jupi, 215
04755-050 Sao Paulo, SP
CHILE
Estad's Unid's 395
Santiago
COLOMBIA
Diagonal 50 -No. 49-14, piso 7
Medellin
ECUADOR
Jorge Washington 742 y 9 de Octubre
Casilla 1711-6530, Quito
PARAGUAY
Av. Espana esq.
Padre Pucheu 485
Asuncion
PERU
Las Camelias 224
San Isidro
Lima 27
URUGUAY
Boulevard Artigas 2011
CP 11800 Montevideo
VENEZUELA
Av Francisco de Miranda
Torre Delta - Piso 3, Ofc D
1602 Altamira, Caracas
JAPAN
HIROSHI ONO
GENERAL MANAGER
CS Tower 3F
11-30 Akasaka 1-chome
Minato-ku, Tokyo 107
AUSTRALIA
MALCOLM JACKMAN
MANAGING DIRECTOR
AUSTRALIA
Level 1, 34 Hunter Street
Sydney NSW 2000
GPO Box 2599
Sydney NSW 2001
NEW ZEALAND
Level 4, 63 Albert Street
Auckland
THE FAR EAST (EXCLUDING JAPAN)
CHRISTINE RAYNAUD
REGIONAL DIRECTOR
SINGAPORE
391B Orchard Road
#25 - 07/08
Ngee Ann City Tower B
Singapore 238874
Christine Raynaud
General Manager
HONG KONG
8th Floor, California Tower
30-32 DOAguilar Street
Central, Hong Kong
Deborah Morgan
General Manager
INDIA
702 Prem Avenue, Opposite B D A
Complex
Koramangala III
Bangalore 560094
MALAYSIA
Suite 17.01 Wisma Nusantara
Jalan Puncak, Off Jalan P. Ramlee
50250 Kuala Lumpur
SOUTH KOREA
114-22, Samsung-dong
Kangnam-ku
Seoul, Korea 135-090
TAIWAN
Formosa Plastics Bldg., B, 7F
201-30 Tun Hua North Road
Taipei
Lucille Wu
General Manager
THAILAND
Unit 9/1, 9th Floor
Bangkok Union Insurance Building
Surawongse Road
Suriyawongse, Bangrak
Bangkok 10500
EUROPE, AFRICA AND THE
MIDDLE EAST
JEFFREY A. JOERRES
SENIOR VICE PRESIDENT
EUROPEAN OPERATIONS
Avenue Louise, 523
1050 Brussels, Belgium
FRANCE
9, rue Jacques Bingen
F-75017 Paris
Michael Grunelius
Managing Director
Bertrand Denis
Deputy General Director
Pierre Catherine
Director of External Relations
Rene Boulland
Financial Director
Gilles Berolatti
Legal and Administrative Director
Jean-Pierre Lemonnier
Human Resource Director
Bertrand Amilhat
IT Director
Bernard Auger
National Accounts Director
Beatrice Sagot
Director of Operational Control
Francois Chojnacki
Director, Paris/Ile de France
Rene Jumel
Director, France Southwest
Christian Guarda
Director, France West
<PAGE> 40
UNITED KINGDOM AND IRELAND
International House
66 Chiltern Street
London W1M 1PR, England
Iain Herbertson
Managing Director
Lynn Elias
Finance Director
Keith Faulkner
Company Secretary and
Public Affairs
David Davies
Financial Controller
Anthony Hoskins
Director of Millennium Projects
Chris Raybould
Director of Branch Operations
Ken Pullan
Director of Managed Operations
Mike Berry
Director of IT Services
Gerard Doyle
Director of IT
Sue George-Jones
Operations Director
Nursing Services
Ouida Weaver
Head of Training and
Human Resources
Sarah Henwood
Director of Marketing
Sara Barrie
Director of Business Development
SCOTLAND
38 George Street
Edinburgh EH2 2LE, Scotland
WALES
90 Queen Street
Cardiff CF1 4ER, Wales
IRELAND
54 Grafton Street
Dublin 2
NORDIC REGION
TOR DAHL
REGIONAL DIRECTOR
Oslo, Norway
NORWAY
Dronning Maudsgate 10
P.O. Box 2506 Solli, 0202 Oslo
Lars Petter Orving
General Manager
SWEDEN
Odengatan 71, Box 6446
113 82 Stockholm
Lars Murman
General Manager
DENMARK
Norre Voldgade 19
1358 Kobenhavn
Lene Anderson
General Manager
FINLAND
Aleksanterinkatu 48A, 6.Krs.
00100 Helsinki
Fredrik Karlsson
General Manager
NORTHERN EUROPEAN REGION
HANS VINK
REGIONAL DIRECTOR
THE NETHERLANDS
Gebouw Athena
Diemerhof 16-18
1112 XN Diemen
Hans Vink
General Manager
GERMANY
Kurt Schumacher Strasse, 31
Postfach 20 01 16
D-60 605 Frankfurt/Main
Diethelm Bender
GeschSftsfYhrer
AUSTRIA
Mahlerstrasse 14
A-1010 Vienna
Gerhard Flenreiss
General Manager
SOUTHERN REGION
YOAV MICHAELY
REGIONAL DIRECTOR
Rome, Italy
ISRAEL
90-92 Igal Alon Street
Tel Aviv 67891
Aki Friedman
Chairman
Tova Elazar
General Manager
SPAIN
Corsega 418 (4th Floor)
08037 Barcelona
Carmen Mur
General Manager
ITALY
Via Gregoriana, 5
00187 Rome
Maura Nobili
General Manager
GREECE
9 Xenofontos St.
Athens
PORTUGAL
Rua Bernardim Ribeiro 30-1
1150 Lisbon
Marcelino Pena Costa
General Manager
<PAGE> 41
OTHER LOCATIONS
SWITZERLAND
6, Rue Winkelried
1201 Geneva
Maria Mumenthaler
Presidente et Deleguee
du Conseil d'Administration
BELGIUM
Avenue Louise, 523
1050 Brussels
Michel Bodart
General Manager
RUSSIA
1 Telegraphnyi Pereulok, #341
101934 Moscow
CZECH REPUBLIC
7 Valentinska
11000 Praha - 1
HUNGARY
Hungaria Krt 140-144
Munkaero Szervezesi
1146 Budapest
LUXEMBOURG
19, rue Glesener
1631 Luxembourg
MONACO
9 rue Princesse Florestine
98000 Monaco
MOROCCO
4, rue des Hirondelles
Casablanca
BROOK STREET BUREAU PLC
ANTHONY J. HOWARD
MANAGING DIRECTOR
Clarence House
134 Hatfield Rd.
St Albans, Herts AL1 4 JB
United Kingdom
CORPORATE ADMINISTRATION
EUROPE, AFRICA AND THE
MIDDLE EAST
Avenue Louise, 523
1050 Brussels, Belgium
Vince Butterworth
Director
European Accounts
Ken Davidson
Director
International Operations Support
Lyndon Evans
Director
International Marketing
Pan Salvaridis
Director
Business Development
Graham Steven
Director
International IT
CORPORATE ADMINISTRATION
Joel W. Biller
Senior Vice President
International Corporate Affairs
General Counsel - U.S.
James A. Fromstein
Senior Vice President
International Marketing
Michael J. Van Handel
Senior Vice President
Chief Financial Officer, Secretary
and Treasurer
Nancy A. Creuziger
Vice President
Audit Advisory Services
George P. Herrmann
Vice President
Chief Accounting Officer
Michael J. Lynch
Vice President
International Support Services and
General Counsel International
GLOBAL MARKETING
Tammy Johns
Vice President
Global Accounts
David Arkless
Vice President
<PAGE> 42
[MANPOWER, INC. LOGO]
WORLD HEADQUARTERS
5301 North Ironwood Road
P.O. Box 2053
Milwaukee, Wisconsin 53201 USA
New York Stock Exchange Symbol: MAN
www.manpower.com
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF MANPOWER INC.
<TABLE>
<CAPTION>
Incorporated in
Corporate Name State/Country of
- -------------- ----------------
<S> <C>
Alabama Services Contractors, Inc. Alabama
Manpower de Servicios S.A. Argentina
Benefits S.A. Argentina
Cotecsud S.A.S.E. (Compania Tecnica
Sudamericana S.A.S.E.) Argentina
Kirby Contract Labour Australia
Manpower Services (Australia) Pty Ltd. Australia
Manpower Holding GmbH Austria
Manpower GmbH Austria
Manpower Temporaerpersonal
Gesellschaft m.b.H. Austria
Manpower Unternehmens und-
Personalberatung Gesellschaft m.b.H. Austria
S.A. Manpower (Belgium) N.V. Belgium
S.A. Multiskill N.V. Belgium
Skillscape Skills Management Services Ltd. British Columbia
Manpower Participacoes Ltda. (Inactive) Brazil
Manpower Ltda. S/C (Inactive) Brazil
Servicios Uno A Ltda. Colombia
Uno A. Servicios Especiales Ltda. Colombia
Manpower Costa Rica Costa Rica
Manpower Czech Republic Czech Republic
Manpower International Inc. Delaware
Manpower CIS Inc. Delaware
</TABLE>
1
<PAGE> 2
<TABLE>
<S> <C>
Manpower Franchises, L.L.C. Delaware
Manpower Holdings, Inc. Delaware
Ironwood Capital Corp. Delaware
Positions, Inc. Delaware
HR Staffing L.L.C. Delaware
U.S. Caden Corporation Delaware
Manpower A/S Denmark
Avalia Finland
Manpower OY Finland
Manpower France S.A.R.L. France
Fortec SARL France
Supplay S.A. France
Manpower GmbH Personaldienstleistungen Germany
Adservice GmbH. Germany
Manpower Team S.A. Greece
Manpower Guatemala S.A. Guatemala
Manpower Services (Hong Kong) Limited Hong Kong
Manpower Swift Recruitment Services Limited Hong Kong
Manpower Munkaero Szervezesi KFT Hungary
Transpersonnel, Inc. Illinois
Manpower Services India Pvt. Ltd. India
Manpower (Ireland) Limited (Inactive) Ireland
Manpower (Israel) Limited Israel
Adam Ltd. (Inactive) Israel
Adi Ltd. Israel
Career Ltd. Israel
Miluot Israel
John Bryce Testing Israel
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
MNAM Ltd. Israel
M.P.H. Holdings Limited Israel
Nativ 2 Ltd. Israel
T. Market (M.A.) Israel
Telepower Israel
Tirgumey Eichut Israel
Unison Engineering Projects Ltd. Israel
S.T.M. Technologies (Inactive) Israel
Manpower Consulting S.p.A. Italy
Manpower Italia S.r.l. Italy
Manpower S.p.A. Italy
Manpower Seleform S.p.A. Italy
Manpower Japan Co., Ltd. Japan
Support Services Specialists of Topeka Kansas
Manpower Services Korea, Inc. Korea
Manpower Professional Service, Inc. Korea
Aide Temporaire Luxembourg S.A.R.L. Luxembourg
Manpower Staffing Services (Malaysia) Sdn Bhd Malaysia
Agensi Perkerjaan Manpower Recruitment Sdn Bhd Malaysia
Manpower S.A. de C.V. Mexico
Servicio de Personal Industrial S.A. de C.V. Mexico
Tecnologia Y Manufactura S.A. de C.V. Mexico
Manpower Monaco S.A.M. Monaco
Societe Marocaine De Travail Temporaire Morocco
Manpower B.V. Netherlands
Manpower Consultancy B.V. Netherlands
Manpower Kantoor-en Paramodisch B.V. Netherlands
Manpower Industrie B.V. Netherlands
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
Manpower Management B.V. Netherlands
Manpower Project Support B.V. Netherlands
Manpower Uitzendorganisatie B.V. Netherlands
Manpower Incorporated of New York New York
Manpower Services (New Zealand) Limited New Zealand
Manpower A/S Norway
Bankpower A/S Norway
Bedtiftsassistanse A/S Norway
Manpower Kantineservice A/S Norway
Techpower A/S Norway
Techpower Telemark A/S Norway
Tri County Business Services, Inc. Ohio
Manpower Services (Ontario) Limited Ontario
Manpower Services (Toronto) Limited Ontario
Services de Personel du Quebec Ltee. Quebec
Manpower Incorporated of Providence Rhode Island
Manpower Staffing Services (Singapore) Pte Ltd Singapore
Goodmen Personnel Services Pte. Ltd. Singapore
Manpower Team Empresa de Trabajo Temporal,
S.A. Unipersonal Spain
Link Externalizacion de Servicios, S.L. Spain
Manpower Aktiebolag Sweden
Manpower Sverige Aktiebolag Sweden
Manpower Outsourcing Aktiebolag Sweden
Manpower Teamwork Kommanditbolag Sweden
Manpower Holding S.A. Switzerland
Manpower S.A. Switzerland
Allegra Finanz AG Switzerland
Manpower HR Management S.A. Switzerland
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
Caden Corporation S.A. Switzerland
Manpower Services S.A. Switzerland
Manpower Services (Taiwan) Co., Ltd. Taiwan
Skillpower Services (Thailand) Co., Ltd. Thailand
Bafin (UK) Limited (Inactive) United Kingdom
Bafin Holdings United Kingdom
Bafin Services Limited (Inactive) United Kingdom
Brook Street (UK) Limited United Kingdom
Brook Street Bureau PLC United Kingdom
BS Project Services Limited United Kingdom
LPNS Limited United Kingdom
Manpower Public Limited Company United Kingdom
Manpower Services Limited United Kingdom
(Inactive) United Kingdom
Challoners Limited (Inactive) United Kingdom
Crewcorp Limited (Inactive) United Kingdom
DP Support Services Limited (Inactive) United Kingdom
Extrastaff Limited (Inactive) United Kingdom
Ferrisbush Limited (Inactive) United Kingdom
Girlpower Limited (Inactive) United Kingdom
Manpower (Hemel) Limited (Inactive) United Kingdom
Manpower Contract Services Limited (Inactive) United Kingdom
Manpower IT Services Limited (Inactive) United Kingdom
Manpower Nominees Limited (Inactive) United Kingdom
Overdrive Limited (Inactive) United Kingdom
Psyconsult International Limited (Inactive) United Kingdom
Roco Limited (Inactive) United Kingdom
Salespower Limited (Inactive) United Kingdom
Tamar Limited (Inactive) United Kingdom
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
Temp Finance & Accounting Services Limited
(Inactive) United Kingdom
Total Staff Recruitment Limited (Inactive) United Kingdom
Aris S.A. Uruguay
Manpower de Venezuela C.A. Venezuela
Manpower of Indiana Limited Partnership Wisconsin
Manpower Nominees Inc. Wisconsin
Manpower Professional Staffing Services Inc. Wisconsin
Manpower Texas Holdings L.L.C. Wisconsin
Manpower of Texas Limited Partnership Wisconsin
North Avenue Commerce Center L.L.C. Wisconsin
Signature Graphics of Milwaukee, Inc. Wisconsin
</TABLE>
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY FOR ANNUAL REPORT ON FORM 10-K
Each of the undersigned directors of Manpower Inc. (the "Company")
hereby constitutes and appoints Mitchell S. Fromstein and Michael J. Van Handel,
and each of them, the undersigned's true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for the undersigned and in
the undersigned's name, place and stead, in any and all capacities, to sign for
the undersigned and in the undersigned's name in the capacity as a director of
the Company the Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1998, and to file the same, with all exhibits thereto, other
documents in connection therewith, and any amendments to any of the foregoing,
with the Securities and Exchange Commission and any other regulatory authority,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or the undersigned's substitute, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have each executed this Power of
Attorney for Annual Report on Form 10-K, on one or more counterparts, this 22nd
day of February, 1999.
/s/ John R. Walter /s/ Dudley J. Godfrey, Jr.
- ----------------------------- ---------------------------------
John R. Walter Dudley J. Godfrey, Jr.
/s/ Marvin B. Goodman /s/ J. Ira Harris
- ----------------------------- ---------------------------------
Marvin B. Goodman J. Ira Harris
/s/ Terry A. Hueneke /s/ Newton N. Minow
- ----------------------------- ---------------------------------
Terry A. Hueneke Newton N. Minow
/s/ Gilbert Palay /s/ Dennis Stevenson
- ----------------------------- ---------------------------------
Gilbert Palay Dennis Stevenson
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE REGISTRANT FOR THE YEAR ENDED DECEMBER 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 180,456
<SECURITIES> 0
<RECEIVABLES> 1,674,729
<ALLOWANCES> 39,504
<INVENTORY> 0
<CURRENT-ASSETS> 1,961,562
<PP&E> 411,391
<DEPRECIATION> 220,131
<TOTAL-ASSETS> 2,381,100
<CURRENT-LIABILITIES> 1,311,056
<BONDS> 154,594
0
0
<COMMON> 833
<OTHER-SE> 668,105
<TOTAL-LIABILITY-AND-EQUITY> 2,381,100
<SALES> 0
<TOTAL-REVENUES> 8,814,272
<CGS> 0
<TOTAL-COSTS> 7,311,278
<OTHER-EXPENSES> 92,100
<LOSS-PROVISION> 11,986
<INTEREST-EXPENSE> 19,155
<INCOME-PRETAX> 113,770
<INCOME-TAX> 38,106
<INCOME-CONTINUING> 75,664
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,664
<EPS-PRIMARY> .94
<EPS-DILUTED> .93
</TABLE>
