ManpowerGroup 2002 Annual Report Download

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At the speed of work

Table of contents

  • Page 1
    At the speed of work

  • Page 2

  • Page 3
    As the world economy continued to languish, a growing number of people found themselves searching for work. unemployment

  • Page 4
    Capital expenditures and projects were shelved or postponed for another year, as budgets were stretched to their limits. budget cuts

  • Page 5
    Profit margins were sacrificed as companies slashed prices to compete for market share. lower profits

  • Page 6
    Small business owners fought to keep their restaurants and stores open as demand continued to decline and expenses became more difficult to manage. weak demand

  • Page 7
    Competition in some industries was dramatically reduced as businesses closed their doors. liquidation

  • Page 8
    The U.S. Securities and Exchange Commission began sweeping reforms to protect investors. reform

  • Page 9
    When the economic recovery did not occur mid-year as some had predicted, it became clear that many investors would be disappointed at the performance of their portfolios. declining stock value

  • Page 10
    Mixed economic news led to a high level of uncertainty among business managers, as they struggled to predict what the next few months would bring. uncertainty

  • Page 11

  • Page 12
    Motorola and Honeywell expanded their partnerships with Manpower in 2002 to advance quality and efficiency gains that we have achieved together across their contingent workforce in multiple countries. partnerships

  • Page 13
    In times of economic uncertainty, Manpower provides its greatest value to its 400,000 customers by enabling them to add or reduce staff quickly to meet inconsistent workforce requirements. flexibility

  • Page 14
    At the speed of a mouseclick, a client can order 100 employees or contractors through our e-commerce tools. These efficiency tools are more important than ever as HR managers find themselves with fewer staff members and need to streamline processes to manage the increased workload. efficiency

  • Page 15
    Customers worldwide are increasingly outsourcing the assessment and selection of candidates to Manpower to enable their staff to focus on core business functions. outsourcing

  • Page 16
    Manpower believes that everyone deserves the opportunity to work. United Cerebral Palsy is one of many partners worldwide that we collaborate with to assist people with special needs in overcoming the obstacles to employment, and earning a sustainable role in the workforce. ability

  • Page 17
    While holding down costs, we maintained our infrastructure, and expanded our network into Turkey and Nicaragua in 2002. Manpower is now serving customers and providing jobs in 63 countries with 3,900 offices. expansion

  • Page 18
    A world leader in training today's workforce, Manpower enables its 1.6 million temporary and contract employees to e-learn free of charge through its online Global Learning Center, which provides more than 1,800 courses, including IT certifications and management classes. development

  • Page 19
    Forty percent of Manpower temporary employees and contractors gain permanent positions with our customers. In a negative business climate, we offer a means to propel many unemployed people back into the workforce more rapidly. opportunity

  • Page 20
    Manpower continued to make progress on our core strategies throughout the year, despite the many potential distractions in the marketplace. We increased efficiency, expanded our range of services and found new ways to help our customers conquer today's HR challenges. progress

  • Page 21
    In 2002, the speed of work moved faster and faster as companies were faced with more challenges and fewer people to manage them. Manpower was there to make the world of work better for our 400,000 customers and the 1.6 million people we placed on assignment.

  • Page 22

  • Page 23
    ... cash flow from operations, of which $115 million was used to reduce our debt levels. We also shaved an additional day from the collection time of our receivables. We were disciplined throughout the year on expenses. We implemented a cost containment Manpower Inc. 200 2 Annual Repor t program that...

  • Page 24
    ...or sourcing, orientation and training to produce results for our global and local customers worldwide. In 2002, across the world, we succeeded in broadening our base of non-contract customers, Manpower Inc. 2002 Annual Report which is an extremely important accomplishment for us in order to balance...

  • Page 25
    ... 2002 because we are confident in their long-term prospects. Jefferson Wells International, our financial professional services firm, was a solid business model prior to the issue of auditor independence arising in the U.S. marketplace, and now it is even more so. We have expanded our office network...

  • Page 26
    ... Annual Report as we have proven for two years, and more importantly, that we can continue to make progress. I could not write this letter without addressing the topics of investor confidence and social responsibility, which have had a high profile in 2002. You can be assured that Manpower operates...

  • Page 27
    ...population in flexible employment environments, while all mature markets are over 2%. This means that, as the world labor markets mature, we have the potential to double our business in nearly every country in our network. The long-term outlook for our industry in general, and Manpower in particular...

  • Page 28
    ... sustainable employment. During 2002 alone, 13,000 long-term unemployed people benefited from the activities of Working Links. Many other workforce development programs are running successfully in countries around the globe including Argentina, Belgium, Mexico, Morocco, Singapore and Spain. Training...

  • Page 29
    ... work to support disabled people. In Spain, Manpower was awarded the prestigious "iV Award of Economy and Business on Prevention of Labor Risks" by the Catalonian Government. And in Sweden, our Mission Manpower program, which provides non-profit organizations with the skilled workers they need free...

  • Page 30
    ... 01 02 Manpower Inc. 2002 Annual Report a ) Systemwide information represents revenues from our branch offices plus the sales activity of locations operating under a franchise agreement with us. We consider Systemwide information to be important because it is a measure of the total market share of...

  • Page 31
    ... Balanc e Sheets Consolidated St atements of Cash Flows Consolidated St atements of Shareholders' Equity Notes to Consolidated Financ ial St atements Quarterly Dat a ( unaudited ) Financ ial Measures Selec ted Financ ial Dat a Corporate Information Princ ipal Operating Units and Worldwide Offic es...

  • Page 32
    ... solutions through a systemwide network of over 3,900 offices in 63 countries. We provide a wide range of human resource services including professional, technical, specialized, office and industrial staffing; temporary and permanent employee testing, selection, training and development; internal...

  • Page 33
    ... amortization). This decrease is due primarily to a continuation of cost control efforts throughout all of our markets in response to the lower revenue levels since late 2001. As a percent of Gross profit, these expenses were 87.7% in 2002 and 87.9% in 2001 ( 87.0% excluding goodwill amortization...

  • Page 34
    ... to control costs in response to the economic slowdown. Selling and administrative expenses were flat in the fourth quarter of 2001 compared to the fourth quarter of 2000. We added 235 net offices during 2001 as we invested in expanding markets, such as Italy, and in acquisitions. Operating profit...

  • Page 35
    ... own financial reports. Each operation reports directly, or indirectly through a regional manager, to a member of executive management. Given this reporting structure, all of our operations have been segregated into the following segments: United States; France; EMEA ( Europe, Middle East and Africa...

  • Page 36
    ... EMEA The EMEA segment includes our operations in Europe, the Middle East and Africa ( excluding France ) . The largest operations included in the segment are located in Germany, Italy, the Netherlands, Norway, Spain, Sweden and the Unite d Kingdom . EMEA revenues increased .2% over the prior year...

  • Page 37
    ... and tax services. It operates a network of offices throughout the United States and Canada. Empower, which was formed in 2000, provides organizational-performance consulting s e r v i c e s through a network of global offices. Revenues of our Other Operations were $1.4 billion in 2002, an increase...

  • Page 38
    ... commitments of $1,235.5 million related to debt repayments, operating leases and certain other commitments as follows: I N M I LLI O N S 2003 2004 2005 2006 2007 TH E R EAF TE R Manpower Inc. 2002 Annual Report Long-term debt Short-term borrowings Operating leases Other $ 6.2 16.6 110.8 3.2 136...

  • Page 39
    ... into certain guarantee contracts and stand-by letters of credit that total approximately $111.1 million ( $39.4 million for guarantees and $71.7 million for stand-by letters of credit ) . The guarantees primarily relate to government requirements for operating a temporary service company in certain...

  • Page 40
    ..., respectively. Additional borrowings of $488.9 million were available to us under these agreements as of December 31, 2002. ( See Significant Matters Affecting Results of Operations and note 6 to the consolidated financial statements for further information. ) The interest rate and facility fee on...

  • Page 41
    ... or changes in laws may require us to record more expense related to workers' compensation. On the other hand, significantly improved claim experience may result in a lower annual expense level. In France, we receive government subsidies as a result of various social programs, mainly related to the...

  • Page 42
    ... margins, and working capital levels; a discount rate; and a terminal value multiple. The revenue growth rates and operating unit profit margins are based on our expectation of future results. As previously discussed, our operating results, including those of our more specialized operations, have...

  • Page 43
    .... We did not have any such forward contracts as of December 31, 2002. I N T E R E S T R AT E S Our exposure to market risk for changes in interest rates relates primarily to our variable rate long-term debt obligations. We have historically managed interest rates through the use of a combination...

  • Page 44
    ... cycles, we provide a wide range of human resource services including professional, technical, specialized, office and industrial staffing; temporary and permanent employee testing, selection, training, and development; internal audit, accounting, technology and tax services; and organizational...

  • Page 45
    ... reviews to be performed at least annually by applying a fair-value-based test at the reporting unit level, which generally represents operations one level below the segments that we report. We have completed the tests as of the date of adoption and for our 2002 review and have determined that there...

  • Page 46
    ... other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2001 and 2000 consolidated financial statements taken as a whole. PricewaterhouseCoopers LLP Milwaukee, Wisconsin January 28, 2003 Manpower Inc. 2002 Annual Report

  • Page 47
    ..., and the related consolidated statements of operations, cash flows and shareholders' equity for each of the three years in the period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on...

  • Page 48
    ...share dat a Y E A R E N D E D D E C E M B E R 31 2002 2001 2000 Revenues from services Cost of services Gross profit Selling and administrative expenses Operating... accompanying notes to consolidated financial statements are an integral part of these statements. 46 Manpower Inc. 2002 Annual Report

  • Page 49
    ... Treasury stock at cost, 9,945,200 and 9,045,200 shares, respectively Total shareholders' equity Total liabilities and shareholders' equity The accompanying notes to consolidated financial statements are an integral part of these balance sheets. $ 3,701.7 $ 3,238.6 in millions , exc ept share dat...

  • Page 50
    ...term borrowings Proceeds from long-term debt Repayments of long-term debt Proceeds from stock option and purchase plans Repurchases of common stock... paid Manpower Inc. 2002 Annual Report $ $ 33.2 96.3 $ $ 38.0 117.9 $ $ 27.1 83.2 The accompanying notes to consolidated financial statements ...

  • Page 51
    ... under option and purchase plans Dividends ( $.20 per share ) Repurchases of common stock Balance, December 31, 2002 $ ... ( 249.8 ) 114.9 10.0 ( 15.1 ) ( 20.0 ) 740.4 The accompanying notes to consolidated financial statements are an integral part of these statements. in millions , exc ept per...

  • Page 52
    ... largest operations, based on revenues, are located in the United States, France and the United Kingdom. We provide a wide range of human resource services, including professional, technical, specialized, office and industrial staffing; temporary and permanent employee testing, selection, training...

  • Page 53
    ... 2002 review and have determined that there are no impairments. We primarily use a discounted cash flow analysis in our impairment reviews to estimate fair value. Significant assumptions used in this analysis include: expected future revenue growth rates, operating unit profit margins, and working...

  • Page 54
    ... 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...

  • Page 55
    ...000 shares were repurchased under the forward repurchase agreement at a total cost of $34.0. Statement of Cash Flows We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Stock Compensation Plans During December 2002, the Financial...

  • Page 56
    ... Financial Statements in millions , exc ept per share dat a We account for all of our fixed stock option plans and our 1990 Employee Stock Purchase Plan in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. No stock-based employee...

  • Page 57
    ...: 2002 2001 2000 Net earnings available to common shareholders Weighted-average common shares outstanding ( in millions ) Effect of dilutive securities - stock options (...share price is 110% of the accreted value of the debentures at the beginning of the conversion period, as defined by the agreement...

  • Page 58
    ...Financial Statements in millions , exc ept per share dat a 03. I N C O M E TA X E S The provision for income taxes consists of: YEAR E N D E D D E C E M B E R 31 2002 2001 2000 CU R R E NT United...$ 92.8 5.0 ( 1.6 ) ( 4.0 ) 1.2 .6 $ 74.8 $ 73.4 $ 94.0 56 Manpower Inc. 2002 Annual Report

  • Page 59
    ... $27.3 has been recorded as of December 31, 2002, as management believes that realization of certain loss carryforwards is unlikely. Pretax income of foreign operations was $162.9, $163.6 and $174.8 in 2002, 2001 and 2000, respectively. United States income taxes have not been provided on unremitted...

  • Page 60
    ... 2001. Costs associated with the transfer of receivables primarily relate to the discount and fees associated with the amounts advanced. During 2002, 2001 and 2000, such costs were $.4, $5.3 and $9.8, respectively, and were recorded as other expenses in the consolidated statements of operations. No...

  • Page 61
    ...Information concerning Short-term borrowings as of December 31, is as follows: 2002 2001 Short-term borrowings Weighted-average interest rates $ 16.6 $ 4.0% 10.2 5.0% We maintain separate lines of credit with foreign financial institutions to meet working capital needs of our foreign operations...

  • Page 62
    ... the facility and issuance fees are .2% and .9%, respectively. On the 364-day Facility, the interest rate is LIBOR plus .925% and the facility fee is .175%. Manpower Inc. 2002 Annual Report Our Five-year Facility and 364-day Facility require, among other things, that we comply with a Debt-to-EBITDA...

  • Page 63
    ... and our non-employee directors are eligible to receive stock options under our 1994 Executive Stock Option and Restricted Stock Plan. As of December 31, 2002, we had approximately 2,393,000 shares of common stock remaining available for grant under this plan. The options, stock appreciation rights...

  • Page 64
    ... to the stock option plan discussed above, we have the Savings Related Share Option Scheme for United Kingdom employees with at least one year of service. As of December 31, 2002, there were approximately 816,000 shares of common stock remaining available for grant under this plan. The employees are...

  • Page 65
    ... status of the plans are as follows: U .S. P L AN S 2002 2001 2002 N O N - U .S. P L AN S 2001 C H A N G E I N B E N E F I T O B L I G AT I O N Benefit obligation, beginning of year Service cost Interest cost Actuarial ( gain ) loss Plan participant contributions Benefits paid Currency exchange...

  • Page 66
    ...service lives of the employees. Plan assets are primarily comprised of common stocks, professionally-managed equity and bond funds, and U.S. and U.K. government and agency securities. Retiree Health Care Plan We provide medical and dental benefits to certain eligible retired employees in the United...

  • Page 67
    ... early retirement package and certain other benefits to eligible employees. These benefits are expected to be paid from the respective defined benefit pension plans. In addition, we no longer provide medical and dental benefits under our U.S. retiree health care plan to certain employees retiring...

  • Page 68
    ... of internal audit, accounting, technology and tax services, for total consideration of approximately $174.0, including assumed debt. The acquisition of Jefferson Wells was originally financed through our existing credit facilities. Jefferson Wells operates a network of offices throughout the United...

  • Page 69
    ... throughout the contract term on the derivative instruments are recorded in the consolidated statements of operations, offsetting the foreign exchange gain or loss recorded on the notes. Interest Rate Risk Management Our exposure to market risk for changes in interest rates relates primarily to...

  • Page 70
    ... own financial reports. Each operation reports directly, or indirectly through a regional manager, to a member of executive management. Given this reporting structure, all of our operations have been segregated into the following segments: United States; France; EMEA ( Europe, Middle East and Africa...

  • Page 71
    ... Note: The amount reported above for France is also on a geographic basis. b ) U.S. revenues above represent revenues from our Company-owned branches only. U.S. Systemwide sales information is provided on page 72. c ) This segment, formerly Other Countries, has been renamed Other Operations to more...

  • Page 72
    ...operations of any segment. b ) Supplemental geographic information is as follows: 2002 2001 2000 $ $ United States United Kingdom Total Foreign $ 62.7 30.8 168.8 $ 49.0 33.2 172.1 $ 41.4 30.7 163.6 Note: The amount reported above for France is also on a geographic basis. Manpower Inc. 2002...

  • Page 73
    ... ( unaudi ted ) 71 F I R ST Q UARTE R SECOND Q UARTE R TH I R D Q UARTE R FO U RTH Q UARTE R TOTAL Y E A R E N D E D D E C E M B E R 31, 2 0 0 2 Revenues from services Gross profit Net earnings Net earnings per share Net earnings per share - diluted Dividends per share Market price: High Low...

  • Page 74
    ... represents revenue from our branch offices plus the sales activity of locations operating under a franchise agreement with us. We consider Systemwide information to be important because it is a measure of the total market share of all entities operating under the Manpower brand in the United States...

  • Page 75
    Selected Financial Data 73 AS OF AND FOR THE YEAR ENDED DECEMBER 31 2002 2001 2000 1999 1998 O P E R AT I O N S D ATA Revenues from services Gross profit Write-down of capitalized software Operating profit ( a) Net earnings ( a) P E R S H A R E D ATA $ 10,610.9 1,910.4 - 234.8 113.2 $ 10,483.8 ...

  • Page 76
    ... Transfer Agent and Registrar Information on Manpower's corporate governance structure and policies can be found online at www.manpower.com in the section titled, "About Manpower." Form 10-K Mellon Investor Services, L.L.C. P.O. Box 3315 South Hackensack, NJ 07606 USA www.melloninvestor.com Stock...

  • Page 77
    ... and Africa ( excluding France ) David Arkless Former U.S. Assistant Secretary of State for Europe and Canada Dennis Stevenson Senior Vice President Corporate Affairs Richard B. Davidson Chairman HBOS plc and Pearson plc John R. Walter 2,3 * Senior Vice President Global Chief Information Officer...

  • Page 78
    ...Zealand â- Nicaragua â- Norway â- Panama â- Paraguay â- Peru â- Philippines Poland â- Portugal â- Puerto Rico â- Reunion â- Russia â- Singapore â- South Africa â- Spain â- Sweden â- Switzerland â- Taiwan â- Thailand Tunisia â- Turkey â- United Kingdom â- United States â- Uruguay...

  • Page 79

  • Page 80
    International Headquar ters P.O. Box 2053 5301 N. Ironwood Rd. Milwaukee, WI 53201 USA +1.414.961.1000 www.manpower.com A R - 10 6 ( 3 / 0 3 ) © 2 0 0 3 M a n p o w e r I n c.