Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Annual Report 17 98K
2: EX-3.2 Amended & Restated By-Laws 22 81K
4: EX-10.13(B) Employment Agent With Jon Chait 3 12K
5: EX-10.13(C) Bonus Agreement With Jon Chait 2 9K
6: EX-10.15 Directors Stock Option Plan 8 36K
7: EX-10.16 Deferred Stock Plan 10 44K
8: EX-10.17(B) Employment Agent With Terry Hueneke 4 13K
9: EX-10.17(C) Bonus Agreement 2 9K
3: EX-10.8 Amended Stock Purchase Plan 6 27K
10: EX-13 Annual Report 18 118K
11: EX-21 Subsidiaries 7 17K
12: EX-24 Power of Attorney 1 10K
13: EX-27 Financial Data Schedule 1 10K
EX-13 — Annual Report
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EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NATURE OF OPERATIONS
Manpower Inc. (the "Company") is the largest non-governmental employment
services organization in the world, with over 2500 offices in 43 countries. The
Company is primarily engaged in temporary help, contract services and employee
training and testing.
RESULTS OF OPERATIONS - YEARS ENDED
DECEMBER 31, 1996, 1995 AND 1994
Revenues from Services increased 10.9% and 27.6% in 1996 and 1995,
respectively. Revenues were unfavorably impacted 2.1% in 1996 and were
favorably impacted 7.0% in 1995 by currency exchange rates. Volume, as measured
by billable hours of branch operations, was up 10.3% in 1996 and 17.3% in 1995.
All of the Company's major markets experienced revenue increases in 1996,
including the United States (14.4%), France (5.9% in French Francs) and the
United Kingdom (7.1% in Pound Sterling).
Cost of services, which consists of payroll and related expenses of
temporary workers, decreased as a percentage of revenues to 81.1% in 1996 from
81.8% in 1995 and 81.5% in 1994. This decrease is primarily attributable to the
reduction of payroll taxes, as a result of government employment incentive
programs, in certain of the Company's European markets. The Company does not
anticipate that it will benefit from this payroll tax reduction in future
periods, and accordingly expects the cost of services percentage to increase in
1997 to prior year levels.
Selling and administrative expenses, as a percentage of revenues, were
15.1% in 1996, 14.4% in 1995 and 15.0% in 1994. The increase in 1996 is due,
among other factors, to advertising costs related to sponsorship of the 1998
World Cup and non-recurring costs related to the employment incentive programs
discussed above. Excluding the impact of changes in foreign currency, selling
and administrative expenses increased 19.0% in 1996 and 16.6% in 1995.
Net interest and other was income of $15.4 million in 1996, compared to
expense of $7.9 million in 1995 and expense of $15.3 million in 1994. During
1996, the Company recorded gains of $15.5 million related to the sale of its
remaining equity interests in two former non-Manpower brand subsidiaries based
in the United Kingdom. The cash proceeds received from the equity interests and
a note receivable was $18.4 million. The Company had previously deferred
recognition of the equity interests and the note due to uncertainties regarding
their eventual realization. The remaining change in net interest and other is
primarily due to the change in net interest, which was $.9 million of income in
1996, compared to $5.8 million of expense in 1995 and $9.1 million of expense
in 1994. The 1996 change is the result of lower worldwide borrowing levels, due
to the conversion of the Company's Convertible Subordinated Debentures in
October of 1995, and lower interest rates. The 1995 change is the result of
both increased investment income and lower worldwide borrowing levels.
The Company provided for income taxes at a rate of 33.0% in 1996 compared
to 37.2% in 1995 and 38.5% in 1994. In 1996, the Company's effective income tax
rate is lower than the U.S. Federal statutory rate of 35% due to the
utilization of capital and net operating loss carryforwards which had been
fully reserved for in prior years. In 1995 and 1994, the Company's effective
income tax rate is higher than the U.S. Federal statutory rate due to state
income taxes and, in 1994, operating losses in certain countries which were not
tax benefited.
Net earnings per share was $1.95 in 1996, compared to net earnings per
share of $1.65 in 1995 and $1.12 in 1994. The 1996 earnings include
non-recurring gains, net of taxes, of $.12 per share on the sale of the
Company's equity interests discussed above. The weighted average shares
outstanding increased by 5.5 million shares in 1996. This increase is due
primarily to the conversion of the Company's Convertible Subordinated
Debentures in October of 1995.
LIQUIDITY & CAPITAL RESOURCES
CASH SOURCES
Cash provided by operating activities was $88.4 million, $98.0 million and
$36.5 million in 1996, 1995 and 1994, respectively. Cash provided by operating
activities was significantly impacted by changes in working capital. Cash
provided by operating activities before working capital changes was $183.4
million, $159.9 million and $110.4 million in 1996, 1995 and 1994,
respectively. The increase in this amount is primarily due to the increased net
earnings of the Company. Cash uses to support net working capital needs were
$95.0 million, $61.9 million and $73.9 million in 1996, 1995 and 1994,
respectively,
Page 7
primarily as a result of the increase in business volumes.
Accounts receivable increased to $1,167.5 million at December 31, 1996 from
$1,043.7 million at December 31, 1995. The change includes a $32.3 million
decrease due to the change in foreign exchange rates, offset by a general
increase in receivables due to the higher sales levels.
Cash was favorably impacted in 1996 by the $18.4 million of proceeds
received from the sale of equity interests. (See discussion above and in Note 8
to the Consolidated Financial Statements.)
Net cash provided by borrowings was $29.5 million, $9.5 million and $12.8
million in 1996, 1995 and 1994, respectively. The 1996 borrowings were used for
acquisitions, as discussed below.
CASH USES
During 1996, the Company acquired A Teamwork Sverige AB, the largest employment
services organization in Sweden, and several franchises in the United States,
Canada and Spain. The total cash consideration paid for these acquisitions, net
of cash acquired, was $32.4 million.
Capital expenditures were $40.9 million, $43.7 million and $26.6 million in
1996, 1995 and 1994, respectively. Capital expenditures primarily relate to
office openings and refurbishment and purchases of computer equipment and
office furniture used in the branch office network.
In November 1996, the Board of Directors authorized the purchase of up to
five million shares of the Company's common stock. The purchases may be made
from time to time at prevailing market prices. At December 31, 1996, 101,700
shares at a cost of $3.2 million had been purchased under this authorization.
Subsequent to December 31, 1996, an additional 665,600 shares have been
purchased at a cost of $21.2 million.
The Company paid dividends of $12.3 million, $10.2 million and $8.1 million
in 1996, 1995 and 1994, respectively.
During 1996, the Company expended the remaining $2.7 million of reserves
related to the strategic restructuring plan started in 1989. These reserves
were used to cover general operating costs and lease costs of properties
vacated under the restructuring plan.
Cash and cash equivalents increased $37.8 million, $60.7 million and $18.8
million in 1996, 1995 and 1994, respectively.
CAPITALIZATION
Total capitalization at December 31, 1996 was $728.9 million, comprised of
$128.2 million of debt and $600.7 million of equity. Debt as a percentage of
total capitalization was 17.6% in 1996 and 18.1% in 1995.
CAPITAL RESOURCES
On April 1, 1996, the Company entered into a $275 million unsecured revolving
credit agreement which includes a $60 million commitment to be used exclusively
for standby letters of credit. Borrowings of $49.3 million and letters of
credit of $43.9 million were outstanding under the facility at December 31,
1996. The facility matures on May 15, 1999 but may be extended for an
additional two years with the lenders' consent. The agreement requires, among
other things, that the Company maintain minimum tangible net worth levels of
not less than $331.1 million, an interest coverage ratio of not less than 3.0
and a debt-to-capitalization ratio of less than .55 to 1. As of December 31,
1996, the Company had tangible net worth of $530.5 million, an interest
coverage ratio of 37.1 and a debt-to-capitalization ratio of .26 to 1.
Borrowings of $47.3 million were outstanding under the Company's U.S.
commercial paper program. These borrowings have been classified as long-term
debt due to the availability to refinance them on a long-term basis under the
revolving credit facility.
In addition to the above, the Company and some of its foreign subsidiaries
maintain separate lines of credit with foreign financial institutions to meet
working capital needs. As of December 31, 1996, such lines totaled $168.0
million, of which $143.6 million was unused.
The Company's principal on-going cash needs are to finance working capital,
capital expenditures 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
Page 8
under the existing facilities would be necessary to finance anticipated working
capital requirements.
SIGNIFICANT MATTERS AFFECTING RESULTS OF OPERATIONS
EFFECT OF EXCHANGE RATE FLUCTUATIONS
Over 70% of the Company's revenues and 65% of operating profits 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 1996,
the resulting translated revenues, expenses and operating profits are lower.
Using constant exchange rates, 1996 revenues and operating profits would have
been approximately 2-3% higher than reported.
Fluctuations in currency exchange rates may also impact the stockholders'
equity of the Company. 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 cumulative translation adjustments. The dollar was
stronger relative to many of the foreign currencies at December 31, 1996
compared to December 31, 1995. Consequently, the cumulative translation
adjustments component of stockholders' equity decreased $16.6 million at
December 31, 1996 compared to the prior year.
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 contract to hedge the loan. Foreign exchange
gains and losses recognized on any transfers are included in the Consoli-dated
Statements of Operations and historically have been immaterial. The Company
generally does not engage in hedging activities, except as discussed above. As
a result, the Company did not hold any derivative instruments other than hedges
of specific transactions with foreign subsidiaries, at December 31, 1996.
IMPACT OF ECONOMIC CONDITIONS
Because one of the principal attractions of using temporary help is to maintain
a flexible supply of labor to meet changing economic conditions, the industry
has been and remains sensitive to economic cycles. 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.
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 the provision of temporary employment
services, either on the temporary help company or the ultimate client company,
including restrictions on 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, taxes, or 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 occur-
Page 9
red 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.
The International Labor Organization (ILO), a UN specialized agency which
sets international labor standards, through its adoption of Convention 96 in
1949, required that member states abolish or strictly control the operation of
private (i.e., non-governmental) firms engaged in the "fee charging employment
agency business." The convention was widely ratified (although not in the U.S.,
Canada or UK) and served as the legal basis in many nations for restricting, or
in some cases, prohibiting, the operation of private temporary help companies.
In recent years, however, many countries relaxed or eliminated restrictions on
the temporary help industry, and in some instances renounced their previous
ratification of Convention 96. In 1994, the ILO determined that the
restrictions of Convention 96 were no longer reasonable or desirable in view of
the positive role played by temporary help companies in labor markets. The ILO
determined that Convention 96 should be revised to reflect the reality of the
current situation. The ILO has included such revision on the agenda for its
1997 annual conference.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
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, 1996 and 1995,
and the related consolidated statements of operations, cash flows and
stockholders' equity for each of the three years in the period ended December
31, 1996. 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, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 31, 1997.
Page 10
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31 1996 1995 1994
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Revenues from Services $ 6,079,905 $ 5,484,175 $ 4,296,443
Cost of services 4,931,937 4,483,343 3,499,833
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Gross profit 1,147,968 1,000,832 796,610
Selling and administrative expenses 921,011 789,179 644,864
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Operating profit 226,957 211,653 151,746
Interest and other (income) expenses (15,355) 7,862 15,257
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Earnings before income taxes 242,312 203,791 136,489
Provision for Income Taxes 80,014 75,749 52,558
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Net earnings $ 162,298 $ 128,042 $ 83,931
===================================================================================================================
Net earnings per share $ 1.95 $ 1.65 $ 1.12
===================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
SUPPLEMENTAL SYSTEMWIDE INFORMATION
(unaudited, dollars in thousands)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31 1996 1995 1994
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Systemwide sales $ 7,474,212 $ 6,883,605 $ 5,609,608
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Systemwide offices at year end 2,519 2,449 2,213
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Systemwide information represents total of Company-owned branches and
franchises.
Page 11
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
[Enlarge/Download Table]
DECEMBER 31 1996 1995
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Current Assets:
Cash and cash equivalents $ 180,553 $ 142,773
Accounts receivable, less allowance for doubtful accounts
of $33,526 and $32,901, respectively 1,167,468 1,043,694
Prepaid expenses and other assets 42,913 39,224
Future income tax benefits 48,151 51,617
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Total current assets 1,439,085 1,277,308
Other Assets:
Investments in licensees 29,409 31,591
Other assets 162,390 100,868
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Total other assets 191,799 132,459
Property and Equipment:
Land, buildings, leasehold improvements and equipment 302,547 267,526
Less: accumulated depreciation and amortization 181,168 159,507
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Net property and equipment 121,379 108,019
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Total assets $ 1,752,263 $ 1,517,786
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Liabilities and Stockholders' Equity
[Enlarge/Download Table]
DECEMBER 31 1996 1995
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Current Liabilities:
Payable to banks $ 24,375 $ 37,559
Accounts payable 235,466 219,794
Employee compensation payable 60,222 56,630
Accrued liabilities 87,444 72,325
Accrued payroll taxes and insurance 195,194 177,150
Value added taxes payable 174,624 167,937
Income taxes payable 30,945 25,286
Current maturities of long-term debt 2,986 1,408
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Total current liabilities 811,256 758,089
Other Liabilities:
Long-term debt 100,848 61,783
Other long-term liabilities 239,453 242,921
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Total other liabilities 340,301 304,704
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 82,206,446 and 81,153,023 shares, respectively822812
Capital in excess of par value 1,579,868 1,564,305
Accumulated deficit (998,230) (1,148,223)
Cumulative translation adjustments 21,476 38,099
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Treasury stock at cost, 101,700 shares (3,230) --
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Total stockholders' equity 600,706 454,993
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Total liabilities and stockholders' equity $1,752,263 $1,517,786
===================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these balance sheets.
Page 13
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31 1996 1995 1994
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Cash Flows from Operating Activities
Net earnings $ 162,298 $ 128,042 $ 83,931
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Amortization of intangible assets 3,780 3,487 6,955
Depreciation 31,838 24,334 20,738
Deferred income taxes (11,405) (4,977) (16,014)
Provision for doubtful accounts 12,360 8,981 14,807
Gain on sale of securities (15,509) -- --
Change in operating assets and liabilities:
Accounts receivable (168,735) (175,064) (291,741)
Other assets (26,170) (27,305) (9,268)
Other liabilities 99,958 140,542 227,056
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Cash provided by operating activities 88,415 98,040 36,464
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Cash Flows from Investing Activities:
Purchases of property and equipment (40,918) (43,705) (26,608)
Acquisitions of businesses, net of cash acquired (32,362) -- --
Proceeds from the sale of property and equipment 1,669 3,111 1,880
Proceeds from sale of securities 18,440 -- --
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Cash used by investing activities (53,171) (40,594) (24,728)
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Cash Flows from Financing Activities:
Net change in payable to banks (11,124) (21,204) 16,074
Proceeds from long-term debt 57,681 32,362 2,466
Repayment of long-term debt (17,051) (1,666) (5,774)
Repurchase of common stock (3,230) -- --
Dividends paid (12,305) (10,171) (8,148)
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Cash provided (used) by financing activities 13,971 (679) 4,618
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Effect of exchange rate changes on cash (11,435) 3,957 2,421
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Net increase in cash and cash equivalents 37,780 60,724 18,775
Cash and cash equivalents, beginning of year 142,773 82,049 63,274
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Cash and cash equivalents, end of year $ 180,553 $ 142,773 $ 82,049
===================================================================================================================
Supplemental Cash Flow Information:
Interest paid $ 7,119 $ 15,297 $ 11,728
===================================================================================================================
Income taxes paid $ 79,230 $ 80,582 $ 49,231
===================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
Page 14
Consolidated Statements of Stockholders' Equity
(in thousands, except per share data)
[Enlarge/Download Table]
Capital in Cumulative Restricted Stock
Common Excess of Par Accumulated Translation Treasury Plan Deferred
Stock Value Deficit Adjustments Stock Compensation Total
Balance, December 31, 1993 $ 737 $ 1,443,568 $ (1,341,877) $ 1,353 $ -- $ (1,100) $ 102,681
Issuances under option and
purchase plans 3 3,485 -- -- -- -- 3,488
Net earnings -- -- 83,931 -- -- -- 83,931
Dividends ($.11 per share) -- -- (8,148) -- -- -- (8,148)
Translation -- -- -- 19,370 -- -- 19,370
Amortization of restricted stock
plan deferred compensation -- -- -- -- -- 1,100 1,100
Other 3 1,049 -- -- -- -- 1,052
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Balance, December 31, 1994 743 1,448,102 (1,266,094) 20,723 -- -- 203,474
Issuances under option and
purchase plans 9 14,252 -- -- -- -- 14,261
Issuance on conversion of sub-
ordinated convertible debentures 54 97,986 -- -- -- -- 98,040
Net earnings -- -- 128,042 -- -- -- 128,042
Dividends ($.13 per share) -- -- (10,171) -- -- -- (10,171)
Translation -- -- -- 17,376 -- -- 17,376
Other 6 3,965 -- -- -- -- 3,971
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Balance, December 31, 1995 812 1,564,305 (1,148,223) 38,099 -- -- 454,993
Issuances under option and
purchase plans 6 9,865 -- -- -- -- 9,871
Net earnings -- -- 162,298 -- -- -- 162,298
Dividends ($.15 per share) -- -- (12,305) -- -- -- (12,305)
Translation -- -- -- (16,623) -- -- (16,623)
Repurchase of common stock -- -- -- -- (3,230) -- (3,230)
Issuances for acquisitions
and other 4 5,698 -- -- -- -- 5,702
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Balance, December 31, 1996 $ 822 $ 1,579,868 $ (998,230) $ 21,476 $ (3,230) $ -- $ 600,706
==================================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
Page 15
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
2,500 offices in 43 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 in which an ownership interest greater than 50% is held. 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 recorded as Investments in licensees in the Consolidated
Balance Sheets. Included in stockholders' equity at December_31, 1996 are
$25,530 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
$34,653, $33,688 and $32,273 for the years ended December 31, 1996, 1995 and
1994, 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. Resulting translation adjustments
are made directly to a separate component of stockholders' equity. Translation
adjustments for those operations in highly inflationary economies and certain
other transaction adjustments are included in earnings and were immaterial for
all periods presented.
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, ranging from five to twenty years. Total intangible
assets of $48,744 and $6,067, net of accumulated amortization of $4,712 and
$5,730 at December 31, 1996 and 1995, respectively, are included in Other
assets in the Consoli-dated Balance Sheets. Amortization expense was $3,780,
$3,487, and $6,955 in 1996, 1995 and 1994, respectively. The intangible asset
and related accumulated amortization are removed from the Consolidated Balance
Sheets when the intangible asset becomes fully amortized.
Property and equipment
Property and equipment is depreciated over estimated useful lives using the
straight-line method. The cost of leasehold improvements is amortized over the
lesser of the life of the improvement or the term of the lease. 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.
Earnings per share
Net earnings per share is computed based upon the weighted average number of
common shares and common share equivalents related to stock options. The
average number of common shares and common share equivalents used in the
computation of the net earnings per share were 83,105,553, 77,644,287 and
75,041,735 for the years ended December 31, 1996, 1995 and 1994, respectively.
Page 16
Statements of cash flows
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Stockholders' equity
In November 1996, the Board of Directors authorized the purchase of up to five
million shares of the Company's common stock. The purchases may be made from
time to time at prevailing market prices. At December 31, 1996, 101,700 shares
at a cost of $3,230 have been purchased under this authorization.
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 $24,300 in 1996. Advertising expenses in 1995 and 1994 were not
material.
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 1995 and 1994 financial statements have been
reclassified to be consistent with the current year presentation.
(2) INCOME TAXES
The provision for income taxes consists of:
[Download Table]
1996 1995 1994
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Current:
United States
Federal $ 19,309 $ 24,611 $ 30,339
State 4,312 5,892 7,614
Foreign 67,798 50,223 30,619
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Total current 91,419 80,726 68,572
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Deferred:
United States
Federal 2,103 2,268 (10,347)
State 676 (1,180) (1,574)
Foreign (14,184) (6,065) (4,093)
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Total deferred (11,405) (4,977) (16,014)
---------------------------------------------------------------------
Total provision $ 80,014 $ 75,749 $ 52,558
=====================================================================
A reconciliation between taxes computed at the United States Federal statutory
tax rate of 35% and the consolidated effective tax rate is as follows:
[Enlarge/Download Table]
1996 1995 1994
---------------------------------------------------------------------------------------
Income tax based on statutory rate $ 84,809 $ 71,327 $ 47,771
Increase (decrease) resulting from:
State income taxes 2,803 2,554 3,350
Change in valuation reserve (6,231) (3,062) 2,259
Other, net (1,367) 4,930 (822)
---------------------------------------------------------------------------------------
Total provision $ 80,014 $ 75,749 $ 52,558
=======================================================================================
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:
[Download Table]
1996 1995
------------------------------------------------------------------------------------
Accrued payroll taxes and insurance $ 45,116 $ 44,705
Employee compensation payable 11,402 17,388
Pension and postretirement benefits 14,749 13,319
Net operating losses and other 60,475 59,738
Valuation allowance (32,059) (38,290)
------------------------------------------------------------------------------------
Total future income tax benefits 99,683 96,860
Less--Noncurrent future income tax benefits (51,532) (45,243)
------------------------------------------------------------------------------------
Current future income tax benefits $ 48,151 $ 51,617
------------------------------------------------------------------------------------
Page 17
Noncurrent future income tax benefits have been classified as Other assets
in the Consolidated Balance Sheets.
The Company has recorded a deferred tax asset of $27,569 for the benefit of
loss carryforwards, all of which expire in 1999 and beyond. Realization is
dependent on generating sufficient taxable income prior to the expiration of
the loss carryforwards. A valuation allowance has been recorded against the
entire amount of this asset as management believes that the asset's realization
is unlikely.
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, 1996, the estimated
amount of unremitted earnings of the foreign subsidiaries totaled $376,300.
(3) PAYABLE TO BANKS AND BANK LINES
OF CREDIT
Information concerning short-term borrowings at December 31 is as follows:
[Download Table]
1996 1995 1994
-------------------------------------------------------------------------
Payable to banks $24,375 $37,559 $54,682
Average interest rates 3.6% 5.8% 5.5%
-------------------------------------------------------------------------
The Company and its subsidiaries have lines of credit, exclusive of the
revolving credit commitments discussed in Note 4, totaling $168,007 at December
31, 1996, of which $143,632 was unused. The Company has no significant
compensating balance requirements or commitment fees.
(4) LONG-TERM DEBT
A summary of long-term debt at December 31 is as follows:
[Download Table]
1996 1995
----------------------------------------------------------------------------------
Commercial paper, maturing within 90 days,
at average interest rates of 5.7% and 6.1%,
respectively $ 47,321 $ 40,927
Revolving credit agreement
U.S. dollar denominated borrowings,
at average interest rate of 5.8% 30,000 --
Yen-denominated borrowings,
at rates of .6% and .7%, respectively 19,286 15,541
Other 7,227 6,723
----------------------------------------------------------------------------------
103,834 63,191
Less--Current maturities (2,986) (1,408)
----------------------------------------------------------------------------------
Other long-term debt $ 100,848 $ 61,783
==================================================================================
On April 1, 1996, the Company entered into a $275,000 unsecured revolving
credit agreement which includes a $60,000 commitment to be used exclusively for
standby letters of credit. Letters of credit totaling $43,853 and $41,063 were
outstanding as of December 31, 1996 and 1995, respectively.
The interest rate and facility fee payable on the total line vary based upon
the Company's financial performance, debt rating and borrowing level, and are
currently at LIBOR plus .225% and .125%, respectively. The facility matures on
May 15, 1999, but may be extended for an additional two years with the lenders'
consent. The agreement requires, among other things, that the Company comply
with minimum tangible net worth levels and interest coverage and
debt-to-capitalization ratios. This agreement replaced the Company's $240
million unsecured revolving credit agreement.
Due to the availability of long-term financing, commercial paper borrowings
have been classified as long-term debt.
On October 16, 1995, the Company called for redemption of all $100,000 of
its 6 1/4% Convertible Subordinated Debentures. The Debentures were converted
into 5,421,489 shares of the Company's common stock prior to the redemption
date. Stockholders' equity was increased by the full amount of the debentures
less the unamortized issuance costs.
If the conversion of the debentures had taken place on January 1, 1994, net
income per share would have been $1.60 and $1.09 for the years ended December
31, 1995
Page 18
and 1994, respectively. These amounts were calculated by adjusting the reported
net earnings by the interest, net of tax, on the debentures and adjusting the
weighted average shares for the shares issued on conversion.
The maturities of long-term debt payable within each of the four years
subsequent to December 31, 1997 are as follows: 1998 - $1,356, 1999 - $98,078,
2000 - $740 and 2001 - $67.
The carrying value of long-term debt approximates fair value.
(5) STOCK COMPENSATION PLANS
During 1996 the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation." As permitted by the statement, the Company will continue to
account for its stock-based compensation plans as presented by APB Opinion No.
25 and related Interpretations. Accordingly, no compensation cost related to
these plans was charged against earnings in 1996 and 1995. In 1994, the Company
recorded expense of $1,100 related to the amortization of the fair market value
of restricted stock awards. The Company has included the additional disclosures
required by SFAS No. 123, however, the pro forma impact of determining
compensation cost based on the fair value of stock awards is not material to
earnings.
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.
Information related to options outstanding under the plans, and the related
weighted-average exercise prices, is as follows:
[Enlarge/Download Table]
1996 1995 1994
---------------------------------------------------------------------------------------------------------
Shares Shares Shares
(000) Price (000) Price (000) Price
---------------------------------------------------------------------------------------------------------
Options
outstanding,
beginning
of period 2,906 $ 16 3,352 $ 16 3,471 $ 15
Granted 273 34 231 25 82 20
Exercised (471) 16 (659) 16 (149) 15
Expired or
cancelled (15) 27 (18) 18 (52) 17
---------------------------------------------------------------------------------------------------------
end of
period 2,693 $ 18 2,906 $ 16 3,352 $ 16
---------------------------------------------------------------------------------------------------------
Options
exercisable,
end of
period 2,390 $ 16 2,738 $ 16 3,326 $ 16
=========================================================================================================
Options outstanding as of December 31, 1996 are as follows:
[Download Table]
Options outstanding Options execisable
---------------------------------------------------------------------------------
Weighted-
average Weighted- Weighted-
remaining average average
Exercise contractual exercise exercise
prices Number life price Number price
---------------------------------------------------------------------------------
10.68-14.25 612 4.5 years $ 12 612 $ 12
15.00-17.13 1,608 6.3 years 16 1,608 16
24.00-29.75 201 8.7 years 26 143 26
30.38-36.88 272 9.4 years 34 27 32
---------------------------------------------------------------------------------
2,693 $ 18 2,390 $ 16
=================================================================================
As of December 31, 1996, no purchase rights, stock appreciation rights or
cash equivalent rights had been granted.
Other stock plans
The Company has reserved 1,250,000 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 1996, 1995 and 1994, 183,666, 111,395 and 194,873
shares were respectively purchased under the plan.
Page 19
The Company also has the Savings Related Share Option Scheme for employees in
the United Kingdom 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 are generally exercisable after 60
months, but may lapse earlier. Funds used to purchase the shares are
accumulated through specified payroll deductions over a 60 month period. As of
December_31, 1996, 178,539 options were outstanding under this plan with
exercise prices ranging from $10.70 to $31.75.
(6) RETIREMENT PLANS
Defined benefit plans
The Company has defined benefit pension and retirement plans covering
substantially all permanent employees. Pension benefits are generally based
upon years of service and compensation levels prior to retirement. The
components of pension expense are as follows:
[Download Table]
1996 1995 1994
-------------------------------------------------------------------------------
Service cost $ 2,969 $ 2,773 $ 2,851
Interest cost 3,575 3,213 2,803
Actual return on assets (5,022) (4,735) (2,524)
Net amortization and deferral 897 1,484 (559)
-------------------------------------------------------------------------------
Total pension expense $ 2,419 $ 2,735 $ 2,571
===============================================================================
The following is a reconciliation of the funded status of the pension plans
at December 31:
[Enlarge/Download Table]
U.S. Plans Non-U.S. Plans
-----------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
-----------------------------------------------------------------------------------------------------------------------
Projected benefit obligation:
Vested benefits $ (19,650) $ (19,120) $ (22,207) $ (17,614)
Nonvested benefits (407) (307) (1,394) (1,146)
-----------------------------------------------------------------------------------------------------------------------
Accumulated benefit
obligation (20,057) (19,427) (23,601) (18,760)
Effect of projected
compensation increases (4,141) (3,852) (7,336) (6,494)
-----------------------------------------------------------------------------------------------------------------------
(24,198) (23,279) (30,937) (25,254)
Plan assets at fair value 20,903 19,112 31,462 26,795
-----------------------------------------------------------------------------------------------------------------------
Plan assets in excess of
(less than) projected
benefit obligation (3,295) (4,167) 525 1,541
Unrecognized net gain (3,930) (2,186) (617) (2,490)
Unrecognized transitional
asset (884) (999) (202) (36)
Unrecognized prior
service cost -- 1 468 458
-----------------------------------------------------------------------------------------------------------------------
Accrued pension cost $ (8,109) $ (7,351) $ 174 $ (527)
=======================================================================================================================
Assumptions used in determining the plans' funded status are as follows:
[Enlarge/Download Table]
U.S. Plans Non-U.S. Plans
-----------------------------------------------------------------------------------------
1996 1995 1996 1995
-----------------------------------------------------------------------------------------
Discount rate 7.5% 7.5% 6.5% 7.2%
Rate of return on plan assets 8.5% 8.5% 7.8% 8.7%
-----------------------------------------------------------------------------------------
Projected salary levels utilized in the determination of the projected
benefit obligation 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.
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. The Company elected not to provide a matching
contribution in 1996, 1995 and 1994.
Page 20
Retiree health care plan
The Company provides medical and dental benefits to eligible retired employees
in the United States. Generally, retired employees who have reached age 65, or
those who have reached age 55 with at least 20 years of service, are eligible
to receive health care benefits. In determining benefits, the plan has taken
into consideration payments by Medicare and other coverages. The plan is
unfunded.
The Company charges the expected costs of retiree health care benefits to
expense during the years that employees render service. The components of
periodic postretirement benefit cost are as follows:
[Enlarge/Download Table]
1996 1995 1994
------------------------------------------------------------------------------------------------
Service cost--benefits earned
during the year $ 1,276 $ 1,431 $ 1,282
Interest cost on accumulated
postretirement benefit obligation 1,339 1,235 1,118
Amortization of unrecognized gain (27) -- --
------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 2,588 $ 2,666 $ 2,400
================================================================================================
The components of the accumulated postretirement benefit obligation at
December 31 are as follows:
[Download Table]
1996 1995
---------------------------------------------------------------------------------
Retirees $ 4,001 $ 3,890
Fully eligible active participants 2,537 2,392
Other active participants 13,235 12,681
---------------------------------------------------------------------------------
Accumulated postretirement benefit obligation 19,773 18,963
Unrecognized net gain 2,777 1,296
---------------------------------------------------------------------------------
Accrued benefit cost $ 22,550 $ 20,259
=================================================================================
The accumulated postretirement benefit obligation was computed using a
discount rate of 7.5% in 1996 and 1995.
The health care cost trend rate has a significant effect on the amounts
reported. The rate was assumed to be 8.5% for 1996 and decreases gradually to
6% for the years 2001and beyond. A one percentage point increase in the assumed
health care cost trend rates would increase the accumulated postretirement
benefit obligation by $3,987 and increase the periodic benefit cost by $606.
(7) 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 noncancellable
operating leases with initial or remaining terms of one year or more consist of
the following at December 31, 1996:
[Download Table]
Year
--------------------------------------------------------------
1997 $ 27,637
1998 22,441
1999 16,282
2000 11,538
2001 7,976
Thereafter 34,280
--------------------------------------------------------------
Total minimum lease payments $ 120,154
--------------------------------------------------------------
Rental expense for all operating leases was $67,198, $64,974 and $57,614 for
the years ended December 31, 1996, 1995 and 1994, respectively.
(8) INTEREST AND OTHER (INCOME) EXPENSES
Interest and other (income) expenses consist of the following:
[Enlarge/Download Table]
1996 1995 1994
-------------------------------------------------------------------------------------------------------
Interest expense $ 6,388 $ 12,655 $ 12,342
Interest income (7,294) (6,826) (3,224)
Gain on sale of securities (15,509) -- --
Foreign exchange losses 941 362 556
Miscellaneous, net 119 1,671 5,583
-------------------------------------------------------------------------------------------------------
Interest and other (income) expenses $ (15,355) $ 7,862 $ 15,257
=======================================================================================================
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.
(9) ACQUISITIONS OF BUSINESSES
During 1996, the Company acquired A Teamwork Sverige AB, the largest employment
services organization in Sweden, as well as several 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 $41,072, the majority of which was
recorded as intangible assets.
Page 21
(10) RESTRUCTURING AND OTHER UNUSUAL ITEMS
Since 1989, the Company has made several strategic decisions which have
eliminated redundancies in operations, particularly those in non-Manpower brand
businesses, reduced operating overhead and re-established its corporate
presence in the United States.
In 1993 the Company recorded a non-cash charge of $20,000 related to the
restructuring, $7,500 to cover the estimated remaining costs and contingencies
associated with the strategic restructuring plan and $12,500 to further adjust
the carrying value of two office buildings related to the former Blue Arrow
operations which will be disposed of under the plan. During 1996, the remaining
accrual of $2,700 was used to cover general operating costs and lease costs of
properties vacated under the restructuring plan.
(11) 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.
(12) BUSINESS SEGMENT DATA BY
GEOGRAPHICAL AREA
Geographical segment information is as follows:
[Enlarge/Download Table]
1996 1995 1994
---------------------------------------------------------------------------------------------------
Revenues from services:
United States (a) $ 1,774,240 $ 1,551,407 $ 1,339,314
France 2,274,761 2,208,729 1,706,384
United Kingdom 867,884 818,023 642,356
Other Europe 678,337 528,363 310,462
Other Countries 484,683 377,653 297,927
---------------------------------------------------------------------------------------------------
$ 6,079,905 $ 5,484,175 $ 4,296,443
===================================================================================================
[Enlarge/Download Table]
1996 1995 1994
----------------------------------------------------------------------------------------
Earnings
before income taxes:
United States $ 88,165 $ 75,970 $ 82,625
France 73,688 72,593 47,261
United Kingdom 33,246 34,972 24,672
Other Europe 38,440 34,971 17,196
Other Countries 22,452 16,492 7,864
Corporate -
Amortization of
intangible assets (3,780) (3,487) (6,955)
Interest and other
(income) expenses 15,355 (7,862) (15,257)
Other (b) (25,254) (19,858) (20,917)
----------------------------------------------------------------------------------------
$ 242,312 $ 203,791 $ 136,489
========================================================================================
Identifiable assets:
United States $ 426,732 $ 365,479 $ 255,638
France 723,900 678,027 558,097
United Kingdom 183,857 157,240 136,035
Other Europe 221,645 175,445 122,841
Other Countries 130,303 102,838 74,145
Corporate (b) 65,826 38,757 44,441
----------------------------------------------------------------------------------------
$ 1,752,263 $ 1,517,786 $ 1,191,197
========================================================================================
Net assets:
United States $ 142,731 $ 107,680 $ (49,486)
France 279,480 241,156 179,894
United Kingdom 71,277 32,088 21,022
Other Europe 77,199 46,481 31,697
Other Countries 30,019 27,588 20,347
----------------------------------------------------------------------------------------
$ 600,706 $ 454,993 $ 203,474
========================================================================================
(a) Total systemwide sales in the United States, which include sales of
Company-owned branches and franchises, were $2,938,926, $2,666,782 and
$2,435,098 for the years ended December 31, 1996, 1995 and 1994, respectively.
(b) Other corporate expense includes costs incurred by the parent company
which do not pertain to any specific geographical segment. Corporate assets
include assets of the parent company that are not used in the operations of any
geographical segment.
Due to the nature of its business, the Company does not have export
sales.
Page 22
QUARTERLY DATA (UNAUDITED)
(in thousands, except per share data)
[Enlarge/Download Table]
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
-------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
-------------------------------------------------------------------------------------------------------------------
Revenues from services $ 1,309,167 $ 1,460,624 $ 1,694,523 $ 1,615,591 $ 6,079,905
Gross profit 244,639 269,260 315,324 318,745 1,147,968
Net earnings 23,195 38,602 52,416 48,085 162,298
Net earnings per share $ .28 $ .46 $ .63 $ .58 $ 1.95
Dividends per share $ -- $ .07 $ -- $ .08 $ .15
Market price-
High $ 34 1/4 $ 43 $ 39 3/8 $ 33 5/8
Low 23 5/8 29 1/2 30 27 7/8
-------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1995
-------------------------------------------------------------------------------------------------------------------
Revenues from services $ 1,199,601 $ 1,371,130 $ 1,520,900 $ 1,392,544 $ 5,484,175
Gross profit 216,324 245,721 278,650 260,137 1,000,832
Net earnings 18,185 28,248 45,045 36,564 128,042
Net earnings per share $ .24 $ .37 $ .59 $ .45 $ 1.65
Dividends per share $ -- $ .06 $ -- $ .07 $ .13
Market price-
High $ 32 3/4 $ 34 1/4 $ 33 3/8 $ 31 1/8
Low 24 3/4 24 1/4 25 3/8 24 1/8
-------------------------------------------------------------------------------------------------------------------
Page 23
SELECTED FINANCIAL DATA
(in millions, except per share data)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31 1996 1995 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------
Operations Data
Revenues from services $ 6,079.9 $ 5,484.2 $ 4,296.4 $ 3,180.4 $ 3,186.6
Amortization of intangible assets 3.8 3.5 7.0 78.1 79.2
Restructuring and other unusual items -- -- -- 20.0 --
Net earnings (loss) from continuing operations
before cumulative effect of change in
accounting principle 162.3 128.0 83.9 (48.9) (39.7)
Net earnings (loss) 162.3 128.0 83.9 (48.9) (46.7)
---------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net earnings (loss) from continuing operations
before cumulative effect of change in
accounting principle $ 1.95 $ 1.65 $ 1.12 $ (.66) $ (.54)
Net earnings (loss) 1.95 1.65 1.12 (.66) (.64)
Dividends .15 .13 .11 -- --
---------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data
Total assets $ 1,752.3 $ 1,517.8 $ 1,191.2 $ 833.3 $ 922.4
Long-term debt 100.8 61.8 130.9 130.0 203.1
---------------------------------------------------------------------------------------------------------------------------
The Notes to Consolidated Financial Statements should be read in conjunction
with the above summary, specifically Note 10 which discusses restructuring
charges.
During the fourth quarter of 1992, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" via a
cumulative adjustment effective January 1, 1992. As a result, the Company
recorded a non-cash, pre-tax charge of $11,608 ($7,080 after income taxes, or
$.10 per share) against earnings in 1992.
Page 24
Dates Referenced Herein and Documents Incorporated by Reference
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