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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended:
MARCH 31, 2002
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from: ______to______
Commission file number: 1-10686
MANPOWER INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1672779
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
5301 N. IRONWOOD ROAD
MILWAUKEE, WISCONSIN 53217
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 961-1000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
SHARES
OUTSTANDING
CLASS AT MARCH 31, 2002
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Common Stock, $.01 par value 75,561,292
EXPLANATION OF AMENDMENT
Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
was reviewed by the Securities and Exchange Commission (the "Commission") as
part of their normal review process. In response to comments received from the
Commission, we have amended Item 2, Management's Discussion and Analysis of
Financial Condition and Results of Operations, of that filing to add additional
disclosure related to the impact of acquisitions on our operating results for
the three months ended March 31, 2002.
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Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Operating Results - Three Months Ended March 31, 2002 and 2001
Revenues decreased 13.9% to $2,284.0 million for the first quarter of 2002.
Revenues were unfavorably impacted during the first quarter of 2002 compared to
2001 by changes in currency exchange rates, as the U.S. Dollar strengthened
relative to many of the functional currencies of our foreign subsidiaries. At
constant exchange rates, the decrease in revenues would have been 10.3%. Revenue
growth in the first quarter of 2002 included approximately $70 million
attributable to acquisitions. Revenues excluding acquisitions decreased 16.5%,
or 12.7% on a constant currency basis.
In the U.S., revenues were down 21.5% during the first quarter of 2002 compared
to 2001, however, this decline shows some improvement from the 25.0%
year-over-year decline experienced during the fourth quarter of 2001. In France,
on a local currency basis, revenues were down 14.1% during the first quarter of
2002 compared to 2001, however the year-over-year declines improved throughout
the quarter. In the United Kingdom, revenues declined 13.3%, on a constant
currency basis, compared to the first quarter of 2001 as the United Kingdom
experienced weaker customer demand due to the weakening economy. Revenues in the
Other Europe segment, on a constant currency basis, were down 6.8% during the
first quarter of 2002 compared to 2001. Revenues of Other Operations increased
21.9%, on a constant currency basis, during the first quarter of 2002 compared
to 2001. Although recent acquisitions accounted for a majority of the increase,
Other Operations posted revenue growth of 3.5% excluding acquisitions.
Gross profit decreased 14.3% from $483.9 million for the first quarter of 2001
to $414.8 million for the first quarter of 2002. The gross profit margin of
18.2% for the first quarter of 2002 was consistent with the same period of 2001.
Gross profit margin gains in France and Other Operations were due primarily to
improved pricing and the higher-margin acquisitions. These gains were offset by
decreases in the U.S., United Kingdom and Other Europe, caused by economic
conditions and changes in business mix. On an organic constant currency basis,
gross profit decreased 14.6% in the second quarter of 2002 compared to 2001.
Gross profit growth attributable to acquisitions was approximately $20 million,
and acquisitions had a 40 basis point (.4%) favorable impact on the gross profit
margin in the first quarter of 2002.
Selling and administrative expenses, excluding goodwill amortization during the
first quarter of 2001, decreased 7.4% to $396.1 million in the first quarter of
2002. As a percent of gross profit, excluding goodwill amortization in 2001,
selling and administrative expenses were 95.5% in the first quarter of 2002
compared to 88.4% in the first quarter of 2001. The increase as a percent of
gross profit is due primarily to the deleveraging of the business caused by the
contracting revenue levels and our continued investment in certain expanding
markets. We continue to make a concerted effort to improve efficiency and
control costs in all major countries.
Interest and other expense decreased $2.3 million from the first quarter of 2001
to $8.0 million in the first quarter of 2002. Net interest expense, including
the loss on sale of accounts receivable, was $7.4 million in the first quarter
of 2002 compared to $8.3 million in the first quarter of 2001. This decrease was
mainly due to lower interest rate levels.
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We provided for income taxes at 36.0% for the first quarter of 2002, which is
equal to the estimated annual effective tax rate based on the currently
available information. This rate is higher than the U.S. Federal statutory rate
due primarily to foreign tax rate differences. For the year ended December 31,
2001, excluding the effect of goodwill amortization, we provided for income
taxes at 35.1%.
On a diluted basis, net earnings per share was $.09 in the first quarter of 2002
compared to $.35 in the first quarter of 2001. The diluted net earnings per
share, for the first quarter of 2002 was negatively impacted by $.01 due to
changes in exchange rates. Excluding the effect of goodwill amortization during
the first quarter of 2001, net earnings per share, on a diluted basis, was $.39.
Liquidity and Capital Resources
Cash provided by operating activities was $30.4 million in the first quarter of
2002 compared to $81.6 million for the first quarter of 2001. Excluding the
changes in amounts advanced under the Receivables Facility, cash provided by
changes in working capital requirements was $2.5 million and $98.5 million for
the first quarter of 2002 and 2001, respectively. This decrease is mainly due to
the changes in working capital obligations due to differences in the timing of
vendor and payroll tax payments. Cash provided by operating activities before
changes in working capital requirements was $27.9 million in the first quarter
of 2002 compared to $50.1 million in the first quarter of 2001. This decrease is
a result of lower earnings levels in 2002.
Capital expenditures were $14.1 million in the first quarter of 2002 compared to
$21.6 million during the first quarter of 2001. These expenditures were
primarily comprised of purchases of computer equipment, office furniture and
other costs related to office openings and refurbishments, as well as
capitalized software costs.
Net cash used to repay borrowings was $7.0 million and $11.4 million in the
first quarter of 2002 and 2001, respectively. The amounts shown as Proceeds from
long-term debt and Repayment of long-term debt relate primarily to commercial
paper borrowings.
We have aggregate commitments related to debt, operating leases and the forward
repurchase agreement. As of March 31, 2002, the aggregate commitments totaled
approximately $1,100.0 million, compared to $1,130.2 million as of December 31,
2001. During the first quarter of 2002, we repurchased the remaining 900,000
shares of common stock under the forward repurchase agreement at a cost of $30.7
million. No further obligations exist under this agreement.
Accounts receivable decreased to $1,847.4 million at March 31, 2002 from
$1,917.8 million at December 31, 2001. This decrease is mainly due to seasonal
fluctuations, as the revenue levels in the first quarter are typically lower
than the fourth quarter. Changes in foreign currency exchange rates during the
first quarter of 2002 negatively impacted the receivable balance by $31.3
million. There were no amounts advanced under the Receivables Facility as of
March 31, 2002, and December 31, 2001. As of March 31, 2001, there was $78.0
million advanced under this facility.
As of March 31, 2002, we had borrowings of $170.7 million and letters of credit
of $65.5 million outstanding under our $450.0 million five-year credit facility,
and borrowings of $60.6 million outstanding under our U.S. commercial paper
program. Commercial paper borrowings, which are backed by the five-year credit
facility, have been classified as long-term debt due to the availability to
refinance them on a long-term basis under this facility.
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We and some of our foreign subsidiaries maintain separate lines of credit with
foreign financial institutions to meet short-term working capital needs. As of
March 31, 2002, such lines totaled $156.4 million, of which $149.3 million was
unused.
Our unsecured zero-coupon convertible debentures, due August 2021
("Debentures"), allow holders of the Debentures to require us to repurchase
these Debentures at the issue price, plus accreted original issue discount, on
the first, third, fifth, tenth and fifteenth anniversary dates. We have the
option to settle this obligation in cash, common stock, or a combination
thereof. Our intent is to settle any potential "put" in cash. Under the current
economic environment, we do not anticipate that the Debentures will be "put" on
the first anniversary date. If a "put" does become likely, however, we expect to
alter the terms of the agreement with the holders of the Debentures to prevent
the "put." In the event of a significant change in the economic environment, we
may choose to settle the "put" with common stock, which may have a dilutive
effect on existing shareholders.
Subsequent to March 31, 2002, Standard & Poor's changed our credit rating
outlook from neutral to negative and Moody's Corporation issued a press release
indicating that our credit rating was under review for possible downgrade. We
currently have an investment grade credit rating and do not anticipate the
result of Moody's Corporation's review to decrease our credit rating below
investment grade.
Forward-Looking Statements
Statements made in this quarterly report that are not statements of historical
fact are forward-looking statements. All forward-looking statements involve
risks and uncertainties. The information under the heading "Forward-Looking
Statements" in our Annual Report on Form 10-K for the year ended December 31,
2001, which is incorporated herein by reference, provides cautionary statements
identifying, for purposes of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, important factors that could cause our
actual results to differ materially from those contained in the forward-looking
statements. Some or all of the factors identified in our Report on Form 10-K may
be beyond our control. Forward-looking statements can be identified by words
such as "expect", "anticipate", "intend", "plan", "may", "will", "believe",
"seek", "estimate", and similar expressions. We caution you that any
forward-looking statement reflects only our belief at the time the statement is
made. We undertake no obligation to update any forward-looking statements to
reflect subsequent events or circumstances.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MANPOWER INC.
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(Registrant)
Date: November 4, 2002 /s/ Michael J. Van Handel
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Michael J. Van Handel
Executive Vice President, Chief Financial Officer, and
Secretary (Signing on behalf of the Registrant and as the
Principal Financial Officer and Principal Accounting
Officer)
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CERTIFICATIONS
I, Jeffrey A. Joerres, Chairman and Chief Executive Officer of Manpower
Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Manpower
Inc.; and
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report.
Date: November 4, 2002 /s/ Jeffrey A. Joerres
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By: Jeffrey A. Joerres
Title: Chairman and
Chief Executive Officer
I, Michael J. Van Handel, Executive Vice President and Chief Financial
Officer of Manpower Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Manpower
Inc.; and
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report.
Date: November 4, 2002 /s/ Michael J. Van Handel
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By: Michael J. Van Handel
Title: Executive Vice President and
Chief Financial Officer
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