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Manpower 10-K 2009 Documents found in this filing:
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended December 31, 2008
OR
Commission
File No. 1-10686
MANPOWER
INC.
(Exact
name of registrant as specified in its charter)
Registrant’s
telephone number, including area code: (414) 961-1000
Securities
registered pursuant to Section 12(b) of the Act:
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes x No ¨
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act. Yes ¨ No x
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer x Accelerated
filer ¨ Non-accelerated
filer ¨ Smaller
reporting company ¨
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No x
The
aggregate market value of the voting stock held by nonaffiliates of the
registrant was $4,623,783,615 as of June 30, 2008. As of February 17,
2009, there were 78,353,899 of the registrant’s shares of common stock
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Parts
I and II incorporate information by reference from the Annual Report to
Shareholders for the fiscal year ended December 31, 2008. Part III is
incorporated by reference from the Proxy Statement for the Annual Meeting of
Shareholders to be held on April 28, 2009.
PART
I
The
terms “Manpower,” “we,” “our,” “us,” or “the Company” refer to Manpower Inc. or
Manpower Inc. and its consolidated subsidiaries, as appropriate in the
context.
Introduction and
History
Manpower
Inc. is a world leader in the employment services industry. Our global network
of over 4,400 offices in 82 countries and territories allows us to meet the
needs of our clients in all industry segments, whether they are global,
multinational or local companies. By offering a complete range of services, we
can help any company – no matter where they are in their business evolution –
raise productivity through improved strategy, quality, efficiency and cost
reduction across their total workforce.
Manpower
Inc.’s five major brands – Manpower, Manpower Professional, Elan, Jefferson
Wells and Right Management – provide a comprehensive range of services for the
entire employment and business cycle including:
This
comprehensive and diverse business mix allows us to mitigate the cyclical
effects of the national economies in which we operate.
2
Our
leadership position also allows us to be a center for quality employment
opportunities for people at all points in their career paths. In 2008, we found
permanent and temporary jobs for four million people who work to help our more
than 400,000 clients meet their business objectives. Seasoned professionals,
skilled laborers, mothers returning to work, elderly persons wanting to
supplement pensions and disabled individuals – all turn to the Manpower group of
companies for employment. Similarly, governments of the nations in which we
operate look to us to help reduce unemployment and train the unemployed with
skills they need to enter the workforce. In this way, our company is a bridge to
permanent employment for those who desire it.
We,
and our predecessors, have been in business since 1948, with shares listed on
the New York Stock Exchange since 1967.
Our
Internet address is www.manpower.com. We make available through our Internet
website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) of the Securities Exchange Act of 1934 as soon as
reasonably practicable after we electronically file such material with, or
furnish it to, the Securities and Exchange Commission. In addition, we also make
available through our Internet website:
Documents
available on the website are also available in print for any shareholder who
requests them. Requests may be made by writing to Mr. Kenneth C. Hunt,
Secretary, Manpower Inc., 100 Manpower Place, Milwaukee, Wisconsin 53212. We are
not including the information contained on or available through our website as a
part of, or incorporating such information by reference into, this Annual Report
on Form 10-K.
3
Our
Operations
United
States
In
the United States, our operations under the Manpower and Manpower Professional
brands are carried out through both branch and franchise offices. We had 547
branch and 240 stand-alone franchise offices in the United States as of
December 31, 2008, as well as on-site locations at clients with significant
permanent, temporary and contract recruitment requirements. We provide a number
of central support services to our branches and franchises, which enable us to
maintain consistent service quality throughout the United States regardless of
whether an office is a branch or franchise. We provide client invoicing and
payroll processing of our contingent workers for all branch offices and some of
our franchise offices through our Milwaukee headquarters.
Our
franchise agreements provide the franchisee with the right to use the
Manpower® or
Manpower Professional® service
mark and associated marks in a specifically defined exclusive territory. In the
United States, franchise fees range from 2-3% of franchise sales. Our franchise
agreements provide that in the event of a proposed sale of a franchise to a
third party, we have the right to repurchase the franchise at the same price and
on the same terms as proposed by the third party. We exercise this right and
intend to continue to do so in the future if opportunities arise with
appropriate prices and terms.
In
the United States, our Manpower operations provide a variety of employment
services, including permanent, temporary and contract recruitment, assessment
and selection, training and outsourcing. During 2008, approximately 27% of our
United States temporary and contract recruitment revenues were derived from
placing office staff, including contact center staff, 52% from placing
industrial staff and 21% from placing professional and technical
staff.
We
also conduct business in the United States under our Jefferson Wells and Right
Management brands. These operations are discussed further in the following
sections.
France
We
are a leading employment service provider in France. We conduct our operations
in France and the surrounding region through 958 branch offices under the name
of Manpower and 93 branch offices under the name Supplay.
The
employment services market in France calls for a wide range of our services
including permanent, temporary and contract recruitment, assessment and
selection, and training. The temporary recruitment market is predominately
focused on recruitment for industrial positions. In 2008, we derived
approximately 67% of our temporary recruitment revenues in France from the
supply of industrial staff, 18% from the supply of construction workers and 15%
from the supply of office staff.
We
also conduct business in France under our Jefferson Wells, Elan and Right
Management brands. These operations are discussed further in the following
sections.
4
Europe,
Middle East and Africa (excluding France and Italy), or Other EMEA
We
are a leading provider of permanent, temporary and contract recruitment,
assessment and selection, training and outsourcing services throughout Europe,
the Middle East and Africa. Our largest operations are in Germany, the
Netherlands, Norway, Spain, Sweden, and the United Kingdom. Collectively, we
operate through 1,233 branch offices and 52 franchise offices in this region.
Our franchise offices are primarily located in Switzerland, where we own 49% of
the franchise.
Manpower
U.K., the largest operation in the Other EMEA segment, comprising 13% of Other
EMEA revenues, is a leading provider of employment services in the United
Kingdom. As of December 31, 2008, Manpower U.K. conducted operations in the
United Kingdom under the Manpower and Manpower Professional brands through a
network of 116 branch offices and also provided on-site services to clients who
have significant permanent, temporary and contract recruitment requirements.
During 2008, approximately 68% of Manpower U.K.’s temporary recruitment revenues
were derived from the supply of office staff, including contact center staff,
20% from the supply of industrial staff and 12% from the supply of technical
staff.
We
also own Brook Street Bureau PLC, or Brook Street, which operates through a
total of 115 branch offices, separate from the Manpower and Manpower
Professional brands in the United Kingdom. Its core business is secretarial,
office and light industrial recruitment. Brook Street operates as a local
network of branches supported by a national head office and competes primarily
with local or regional independents. Brook Street’s revenues are comprised of
temporary and contract placements as well as permanent recruitment.
Also
included in our Other EMEA operations is Elan, which is a leading IT and
technical recruitment firm. In addition to IT and technical recruitment, Elan
provides managed service solutions to clients, which enable them to recruit
personnel efficiently and achieve ongoing cost savings. Elan provides services
in 16 countries, with the largest operations in the United Kingdom.
During
2008 for our Other EMEA operations, approximately 34% of temporary and contract
recruitment revenues were derived from placing office staff, 29% from placing
industrial staff and 37% from placing professional and technical
staff.
We
also conduct business in Other EMEA under our Jefferson Wells and Right
Management brands. These operations are discussed further in the following
sections.
Italy
In
Italy, we are a leading employment services provider and conduct our operations
under the Manpower and Manpower Professional brands through a network of 460
branch offices. Our Manpower operations in Italy provide a comprehensive line of
employment services including permanent, temporary and contract recruitment,
assessment and selection, training and outsourcing. In 2008, approximately 3% of
our temporary and contract recruitment revenues in Italy were derived from
placing office staff, including contract center staff, 75% from placing
industrial staff and 22% from placing professional and technical
staff.
We
also conduct business in Italy under our Elan, Jefferson Wells and Right
Management brands. The latter two operations are discussed further in the
following sections.
5
Jefferson
Wells
Jefferson
Wells delivers professional services in the areas of internal audit, technology
risk management, tax, and finance and accounting. The company serves
clients, including Fortune 500, FTSE 350 and Global 1000 companies, through
highly experienced, salaried professionals working from offices
worldwide. Jefferson Wells does not perform attestation work. Its
unique business model emphasizes seasoned professionals with public accounting
and industry experience. Jefferson Wells focuses on client needs and delivers
independent, cost-effective results by providing solutions across a wide range
of finance-related business functions. Jefferson
Wells employs only experienced professionals. Its mission has always been to
provide exceptional service at competitive rates by putting resources into local
offices, rather than a centralized, partner-based organization. This allows the
company to keep their fees reasonable, with experts available locally and travel
and lodging expenses nominal or non-existent. Jefferson Wells’ professionals
have extensive experience in a variety of industries, including: automotive,
business services, communications, construction, education, energy and
utilities, financial services, government, healthcare, hospitality, insurance,
retail, technology and manufacturing.
Jefferson
Wells has operations in the United States, Canada, England, Germany, The
Netherlands, South Africa and Hong Kong through 36 offices, and delivers
services in more than 30 countries and markets worldwide.
Right
Management
Right
Management is the world’s leading provider of integrated human capital
consulting services and solutions across the employment
lifecycle. Right Management helps clients maximize the return on
their human capital investments while assisting individuals to achieve their
full potential. Right Management, operates from 283 branch offices in
51 countries across the Americas, Europe and Asia Pacific, and 12 franchise
offices in the United States, serving large and medium-sized businesses in all
industries, including 80% of the Fortune 500 and 50% of the Global
1000.
Transition
services offer assistance to individuals or groups of employees displaced from
employment. Services range from advising employers on severance packages to
assisting displaced employees with resume writing, networking and interviewing
skills. Services to displaced employees are provided in individual or group
programs. Managerial-level employees generally receive longer-term, individual
services, while less-senior employees receive shorter-term, group-based
services. Programs frequently begin with the displaced employee receiving
counseling immediately after the layoff notification, followed by a combination
of classroom training, support services and web-based tools to guide them along
the remainder of the outplacement process.
Organizational
Consulting services help companies succeed in managing their evolving human
capital needs. For most organizations around the globe, the development of
current and future leaders is a top priority. Right Management’s world-class and
world-wide approach to individual coaching and leadership development focuses on
improving the effectiveness of both leaders and teams to achieve real business
results for their employer. Right Management assists organizations to evaluate
their potential and current talent base through assessment and competency
modeling processes that ensure the optimal organizational design and fit of
individuals. In addition to assessing and developing talent, Right
Management provides regional and global clients with consulting solutions that
drive organizational effectiveness, employee engagement, and alignment of the
workforce through customized tools, interventions, and workshops. Right
Management’s deep expertise helps organizations address the essential issues of
assessing, developing, engaging and retaining the talent required to
successfully drive their business strategy.
6
Other
Operations
We
operate under the Manpower and Manpower Professional brands through 564 branch
offices and 15 franchise offices in the other markets of the world. The largest
of these operations are located in Australia, Japan, Mexico and Argentina, all
of which operate through branch offices, and Canada, which operates through
branch and franchise offices. Other operations are located throughout the
Americas and Asia and operate through branch and franchise offices. In most of
these countries, we primarily supply contingent workers to the office,
industrial, and technical markets, which were 45%, 42%, and 13% of temporary and
contract recruitment revenues, respectively. Competition
Introduction
We
compete in the employment services industry by offering a complete range of
services, including permanent, temporary and contract recruitment, assessment
and selection, training, outsourcing, consulting and professional
services.
Our
industry is large and fragmented, comprised of thousands of firms employing
millions of people and generating billions of U.S. Dollars in annual revenues.
It is also a highly competitive industry, reflecting several trends in the
global marketplace such as the notably increasing demand for skilled people,
employers’ desire for more flexible working models and consolidation among
clients and in the employment services industry itself. We manage these trends
by leveraging established strengths, including one of the employment services
industry’s most recognized and respected brands; geographic diversification;
size and service scope; an innovative product mix; and a strong client base.
While staffing is an important aspect of our business, our strategy is focused
on providing both the skilled employees our clients need and high-value
workforce management, outsourcing and consulting solutions.
Client
demand for employment services is dependent on the overall strength of the labor
market and secular trends toward greater workforce flexibility within each of
the countries and territories in which we operate. Improving economic growth
typically results in increasing demand for labor, resulting in greater demand
for our staffing services. Correspondingly, during periods of weak economic
growth or economic contraction, the demand for our staffing services typically
declines, while demand for our outplacement services typically
accelerates.
During
the last several years, secular trends toward greater workforce flexibility have
had a favorable impact on demand for our services in several markets. As
companies attempt to increase the variability of their cost base, the
contemporary work solutions we provide help them to effectively address the
fluctuating demand for their products or services.
Our
client mix consists of both small- and medium-size businesses, which are based
upon a local or regional relationship with our office network in each market,
and large national/multinational client relationships, which comprised
approximately 42% of our revenues in 2008. These large national and
multinational clients will frequently enter into non-exclusive arrangements with
several firms, with the ultimate choice among them being left to the local
managers. As a result, employment services firms with a large network of offices
compete most effectively for this business which generally has agreed-upon
pricing or mark-up on services performed. Client relationships with small- and
medium-size businesses tend to rely less upon longer-term contracts, and the
competitors for this business are primarily locally-owned
businesses.
7
Recruitment
Services Market
Our
portfolio of recruitment services includes permanent, temporary and contract
recruitment of professionals, as well as administrative and industrial
positions. It also includes our Recruitment Process Outsourcing (RPO) offering,
where we take on the management of customized, large-scale recruiting and
workforce productivity initiatives for clients in an exclusive outsourcing
contract. All of these services are provided under the Manpower, Manpower
Professional and Elan brands.
The
temporary recruitment market throughout the world is large and highly fragmented
with more than 15,000 firms competing throughout the world. The global RPO
market was approximately $4 billion in 2008 and is projected to more than double
to $7 billion by 2010. RPO accounts for approximately 4-5% of the overall Human
Resource Outsourcing market. In addition to us, the largest publicly owned
companies specializing in recruitment services are Adecco, S.A. (Switzerland),
Randstad Holding N.V. (Netherlands) and Kelly Services, Inc.
(U.S.).
Historically,
in periods of economic prosperity, the number of firms providing recruitment
services has increased significantly due to the combination of a favorable
economic climate and low barriers to entry. Recessionary periods generally
result in a reduction in the number of competitors through consolidation and
closures; however, historically this reduction has proven to be for a limited
time as the following periods of economic recovery have led to a return in
growth in the number of competitors.
Due
to the difficult economic environment that arose in the latter half of 2008, we
believe many of our smaller, local competitors will struggle and we anticipate
further consolidation in the near term. We view this as an opportunity to take
market share in 2009.
In
most areas, no single company has a dominant share of the temporary and contract
recruitment market.
Recruitment firms act as intermediaries
in matching available permanent, temporary and contract workers to employer
assignments. As a result, these firms compete both to recruit and retain a
supply of permanent, temporary and contract workers and to attract clients to
employ these workers. We recruit permanent, temporary and contract workers
through a wide variety of means, including personal referrals, online resources
and advertisements, and by providing an attractive compensation package in
jurisdictions where such benefits are not otherwise required by law, including
health insurance, vacation and holiday pay, incentive and pension plans and a
recognition program.
Methods
used to market recruitment services to clients vary depending on the client’s
need for permanent, temporary and RPO services, the local labor supply, the
length of assignment and the number of workers required. Our full range of
employment services and multiple brands enable us to cross-market to clients in
order to leverage our relationships and expand our services provided, from
outplacement services at Right Management to permanent recruitment services at
Manpower Professional, to RPO services, etc. We compete by means of quality of
service provided, scope of service offered, ability to source the right talent
and price. Success in providing high quality recruitment services is a function
of the ability to access a supply of available workers, select suitable
individuals for a particular assignment and, in some cases, train available
workers in skills required for an assignment. For RPO services, success is
defined primarily by the ability to perform the recruitment function more
effectively and efficiently than the client could perform those functions
internally.
8
An
important aspect in the selection of temporary and contract workers for an
assignment is the ability of the recruitment firm to identify the skills,
knowledge, abilities, and personal characteristics of a temporary worker and
match their competencies or capabilities to an employer’s requirements. We have
a variety of proprietary programs for identifying and assessing the skill level
of our associates, which are used in selecting a particular individual for a
specific assignment. We believe that our assessment systems enable us to
offer a higher quality service by increasing productivity, decreasing turnover
and reducing absenteeism.
It
is also important to be able to access a large network of skilled workers and to
be able to “create” certain hard-to-find skills by offering training to
available workers. Our competitive position is enhanced by our ability to offer
a wide variety of skills, in some of the most important market segments, through
the use of training systems. Our Manpower Direct TrainingSM online
university provides over 5,000 hours of online courses that are accessible 24/7
and are free to our employees and associates to help them improve their skills.
The courses cover a wide range of subjects in many languages and feature the
latest information for a variety of fields, from learning the latest technology
in the IT field, to brushing up on business management courses or software
programs. This training can also enable students in any profession to further
develop their skills, improve their employability and earn higher
wages.
Outplacement
and Human Resource Consulting Services Market
Our
outplacement and Human Resource consulting services are primarily provided under
the Right Management brand. The market for outplacement and HR consulting
services is highly competitive. In the market for services required by global
clients, there are several barriers to entry, such as the global coverage,
specialized local knowledge and technology required to provide outstanding
services to corporations on a global scale.
Our
competitors in the outplacement market include outplacement services firms such
as Drake Beam Morin, Lee Hecht Harrison (owned by Adecco); and career service
divisions of global employment services firms. Additionally, there are regional
firms and numerous smaller boutiques operating in either limited geographic
markets or providing limited services. Our competitors in the HR consulting
space include major firms that compete in serving the large employer worldwide,
such as Mercer Delta, Towers Perrin, Watson Wyatt, DDI and Hewitt Associates;
boutique firms comprised primarily of professionals formerly associated with the
firms mentioned above; and newer to this market, some of the human resource IT
firms that are starting to compete in the HR space (e.g. Kenexa). While public
accounting and consulting firms such as PricewaterhouseCoopers and
Deloitte & Touche have been competitors in the past, these firms
represent less direct competition due to a reduction in their consulting
businesses as a result of the Sarbanes-Oxley Act legislation.
Companies
choose to provide outplacement services for several reasons. First, as the
competition for attracting and retaining qualified employees increases,
companies are increasingly attempting to distinguish themselves in the
marketplace as attractive employers. Consequently, more companies are providing outplacement
services as part of a comprehensive benefits package that provide for the well
being of employees – not only during their period of employment, but also after
their employment ceases. Additionally, when companies experience layoffs, many
believe that providing outplacement services projects a positive
corporate image and improves morale among the remaining employees. Finally,
companies may provide outplacement services to reduce costs by preparing and
assisting separated employees to find new employment, thereby diminishing
employment-related litigation. Companies choose
Right Management for the high-tech, high-touch approach of our outplacement
services and the flexibility of our solutions to meet specific organizational
and candidate needs. Our technology solutions are integral to our outplacement
services. We have made significant investments in technology to augment our core
services with online, 24/7 access and support for both clients and candidates.
Our solutions include: Right Navigator TM,
RightChoice
TM, RightTrack SM,
Right-from-Home ®, Right
Connection ®, Right
FasTrack SM
, Right Access SM iView TM and
Wellness and Productivity Management along
with Job Banks and Resume Banks.
9
Companies
augment their internal human resources professional staff with external
consultants for many reasons. First, the growing importance and complexity of
employee issues is creating an unprecedented theoretical and technical service
expectation on human resources departments. Additionally, human resources
departments have continued pressure to contain costs without minimizing the
resources available to managers. Finally, companies increasingly choose to
outsource non-core functions that can be addressed more effectively by outside
professionals. These organizations look to Right Management for thought
leadership and best practices on attracting and assessing organizational talent,
leadership development and engaging and aligning the workforce.
Professional
Services
Jefferson
Wells competes in the professional services industry as a high-value alternative
to public accounting firms and other consulting groups, serving clients through
highly experienced, salaried professionals working from offices
worldwide.
The
professional services industry is highly competitive and comprised of public
accounting firms, mid-level consulting firms and specialty consulting houses.
The “Big Four” public accounting firms are Deloitte & Touche,
Ernst & Young, PricewaterhouseCoopers and KPMG. Competitors in the
professional services market include Protiviti, Grant Thornton, Parson
Consulting, Robert Half International and Resources Global Professionals.
Additionally, numerous smaller boutiques either operate in limited geographic
markets or provide limited services. While public accounting and consulting
firms can be primary competitors, these firms also frequently refer Jefferson
Wells to assist clients with engagements where there are conflict-of-interest
concerns. Jefferson Wells does not perform attestation work, enabling the firm
to provide an objective review of a client’s business processes, and avoiding
potential conflicts of interest.
In
an evolving global marketplace, a variety of market trends affect the
professional services industry, primary among them are: increasing demand for
highly experienced people, global business expansion with a need for consistent
methodology and service delivery, and the high cost of full-time professionals
with specialized skills.
Jefferson
Wells has developed a variety of proprietary methodologies and tools, including
a firm-wide Service Quality Process used on every engagement. Jefferson Wells
identifies and confirms business needs and then employs proven approaches to
provide client solutions. The firm’s competitive advantage resides in the
combination of Jefferson Wells’ methodologies and highly experienced resources,
which enables the firm to offer a higher level of service delivery to
clients.
Jefferson
Wells serves numerous industries, with the largest concentration in financial
services, manufacturing, energy and utilities, and healthcare.
Regulation
The
employment services industry is closely regulated in all of the major markets in
which we operate, except the United States and Canada. Employment services firms
are generally subject to one or more of the following types of government
regulation:
10
In
many markets, the existence or absence of collective bargaining agreements with
labor organizations has a significant impact on our operations and the ability
of clients to use our services. In some markets, labor agreements are structured
on an industry-wide, rather than company-by-company, basis. Changes in these
collective bargaining agreements have occurred in the past and are expected to
occur in the future and may have a material impact on the operations of
employment services firms, including us.
In
many countries, including the United States and the United Kingdom, employment
services firms are considered the legal employers of temporary and contract
workers. Therefore, laws regulating the employer/employee relationship, such as
tax withholding or reporting, social security or retirement, anti-discrimination
and workers’ compensation, govern the firm. In other countries, employment
services firms, while not the direct legal employer of temporary and contract
workers, are still responsible for collecting taxes and social security
deductions and transmitting such amounts to the taxing authorities.
In
many countries, particularly in continental Europe and Asia, entry into the
employment services market is restricted by the requirement to register with, or
obtain licenses from, a government agency. In addition, a wide variety of
ministerial requirements may be imposed, such as record keeping, written
contracts and reporting. The United States and Canada do not presently have any
form of national registration or licensing requirement.
In
addition to licensing or registration requirements, many countries impose
substantive restrictions on the use of temporary and contract workers. Such
restrictions include regulations affecting the types of work permitted, the
maximum length of assignment, wage levels or reasons for which temporary and
contract workers may be employed. In some countries special taxes, fees or costs
are imposed in connection with the use of temporary and contract workers. For
example, temporary and contract workers in France are entitled to a 10%
allowance for the uncertain duration of employment, which is eliminated if a
full-time position is offered to them within three days after assignment
termination. In some countries, the contract of employment with temporary and
contract employees must differ from the length of assignment.
Our
outplacement and consulting services generally are not subjected to governmental
regulation in the markets in which we operate.
In
the United States, we are subject to various federal and state laws relating to
franchising, principally the Federal Trade Commission’s Franchise Rules and
analogous state laws which impact our agreements with our franchised operations.
These laws and related rules and regulations impose specific disclosure
requirements. Virtually all states also regulate the termination of
franchises.
Also
see Item 7. “Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Legal Regulations.”
11
Trademarks
We
maintain a number of registered trademarks, trade names and service marks in the
United States and various other countries. We believe that many of these marks
and trade names, including Manpower®,
Manpower Professional®, Right
Management Consultants®,
Jefferson Wells®, Brook
Street®,
Elan®,
Ultraskill®, and
Skillware®, have
significant value and are materially important to our business. In addition, we
maintain other intangible property rights. The trademarks have been assigned an
indefinite life based on our expectation of renewing the trademarks, as
required, without material modifications and at a minimal cost, and our
expectation of positive cash flows beyond the foreseeable future.
Employees
We
had approximately 33,000 full-time equivalent employees as of December 31,
2008. In addition, we estimate that we recruit on behalf of our clients
approximately four million permanent, temporary and contract workers on a
worldwide basis each year.
As
described above, in most jurisdictions, we, as the employer of our temporary and
contract workers or as otherwise required by applicable law, are responsible for
employment administration. This administration includes collection of
withholding taxes, employer contributions for social security or its equivalent
outside the United States, unemployment tax, workers’ compensation and fidelity
and liability insurance, and other governmental requirements imposed on
employers. In most jurisdictions where such benefits are not legally required,
including the United States, we provide health and life insurance, paid holidays
and paid vacations to qualifying temporary and contract employees.
Financial Information about
Foreign and Domestic Operations
Note
15 to our consolidated financial statements sets forth the information required
for each segment and geographical area for the years ended December 31,
2008, 2007 and 2006. Such note is found in our 2008 Annual Report to
Shareholders and is incorporated herein by reference.
12
FORWARD-LOOKING
STATEMENTS
Statements
made in this report that are not statements of historical fact are
forward-looking statements. In addition, from time to time, we and our
representatives may make statements that are forward-looking. All
forward-looking statements involve risks and uncertainties. This section
provides you with 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 forward-looking statements made in this report or otherwise
made by us or on our behalf. You can identify these forward-looking statements
by forward-looking words such as “expect”, “anticipate”, “intend”, “plan”,
“may”, “will”, “believe”, “seek”, “estimate”, and similar expressions. You are
cautioned not to place undue reliance on these forward-looking
statements.
The
following are some of the factors that could cause actual results to differ
materially from estimates contained in our forward-looking
statements:
13
Some
or all of these factors may be beyond our control. 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 statement to
reflect events or circumstances after the date on which the statement is
made. 14
RISK
FACTORS
Any
significant economic downturn could result in our clients using fewer temporary
and contract workers or becoming unable to pay us for our services on a timely
basis or at all, which would materially adversely affect our
business.
Because
demand for recruitment services is sensitive to changes in the level of economic
activity, our business may suffer during economic downturns. As economic
activity begins to slow down, companies tend to reduce their use of temporary
and contract workers before undertaking layoffs of their regular employees,
resulting in decreased demand for temporary and contract workers. Significant
declines in demand, and thus in revenues, can result in expense de-leveraging,
which would result in lower profit levels.
In
addition, during economic downturns companies may slow the rate at which they
pay their vendors or become unable to pay their debts as they become
due. If any of our significant clients does not pay amounts owed to
us in a timely manner or becomes unable to pay such amounts to us at a time when
we have substantial amounts receivable from such client, our cash flow and
profitability may suffer.
The
worldwide employment services industry is highly competitive with limited
barriers to entry, which could limit our ability to maintain or increase our
market share or profitability.
The
worldwide employment services market is highly competitive with limited barriers
to entry, and in recent years has been undergoing significant consolidation. We
compete in markets throughout North America, South America, Europe, Australia
and Asia with full-service and specialized employment services agencies. Several
of our competitors, including Adecco S.A., Randstad Holding N.V. and Kelly
Services, Inc., have very substantial marketing and financial resources. Price
competition in the staffing industry is intense and pricing pressures from
competitors and clients are increasing. We expect that the level of competition
will remain high in the future, which could limit our ability to maintain or
increase our market share or our profitability.
Government
regulations may result in prohibition or restriction of certain types of
employment services or the imposition of additional licensing or tax
requirements that may reduce our future earnings.
In
many jurisdictions in which we operate, such as France and Germany, the
employment services industry is heavily regulated. For example, governmental
regulations in Germany restrict the length of contracts and the industries in
which our associates may be used. In some countries, special taxes, fees or
costs are imposed in connection with the use of our associates. For example, our
associates in France are entitled to a 10% allowance for the uncertain duration
of employment, which is eliminated if a full-time position is offered to them
within three days. The countries in which we operate may, among other
things:
Any
future regulations may have a material adverse effect on our financial
condition, results of operations and liquidity because they may make it more
difficult or expensive for us to continue to provide employment
services.
15
Our
acquisition strategy may have a material adverse effect on our business due to
unexpected or underestimated costs.
From
time to time, we acquire and invest in companies throughout the world, including
franchises. The total cash consideration paid for acquisitions, net
of cash acquired, was $242.0 million and $122.8 million in 2008 and 2007,
respectively. We may make
additional acquisitions in the future. Our acquisition strategy involves
significant risks, including:
These
risks could have a material adverse effect on our business because they may
result in substantial costs to us and disrupt our business. In addition, future
acquisitions could materially adversely effect our business, financial
condition, results of operations and liquidity because they would likely result
in the incurrence of additional debt or dilution, contingent liabilities, an
increase in interest expense and amortization expenses related to separately
identified intangible assets. Possible impairment losses on goodwill and
intangible assets with an indefinite life, or restructuring charges could also
occur. For example, we recorded a goodwill and intangible asset
impairment charge of $163.1 million in 2008 related to our acquisition of Right
Management.
Intense
competition may limit our ability to attract, train and retain the qualified
personnel necessary for us to meet our clients’ staffing needs.
We
depend on our ability to attract and retain qualified associates who possess the
skills and experience necessary to meet the requirements of our clients. We must
continually evaluate and upgrade our base of available qualified personnel
through recruiting and training programs to keep pace with changing client needs
and emerging technologies. Competition for individuals with proven professional
skills, particularly employees with accounting and technological skills, is
intense, and we expect demand for such individuals to remain very strong for the
foreseeable future. Qualified personnel may not be available to us in sufficient
numbers and on terms of employment acceptable to us. Developing and implementing
training programs requires significant expenditures and may not result in the
trainees developing effective or adequate skills. We may not be able to develop
training programs to respond to our clients’ changing needs or retain associates
who we have trained. The failure to recruit, train and retain qualified
associates could materially adversely affect our business because it may result
in an inability to meet our clients’ needs.
16
We
may be exposed to employment-related claims and costs from clients or third
parties that could materially adversely affect our business, financial condition
and results of operations.
We
are in the business of employing people and placing them in the workplaces of
other businesses. Risks relating to these activities include:
We
may incur fines and other losses or negative publicity with respect to these
problems. In addition, some or all of these claims may give rise to litigation,
which could be time-consuming to our management team and costly and could have a
negative impact on our business. We cannot be certain we will not experience
these problems in the future.
We
cannot be certain our insurance will be sufficient in amount or scope to cover
all claims that may be asserted against us. Should the ultimate judgments or
settlements exceed our insurance coverage, they could have a material effect on
our results of operations, financial position and cash flows. We cannot be
certain we will be able to obtain appropriate types or levels of insurance in
the future, that adequate replacement policies will be available on acceptable
terms, if at all, or that the companies from which we have obtained insurance
will be able to pay claims we make under such policies.
If
we lose our key personnel, then our business may suffer.
Our
operations are dependent on the continued efforts of our officers and executive
management and the performance and productivity of our local managers and field
personnel. Our ability to attract and retain business is significantly affected
by local relationships and the quality of service rendered. The loss of those
key officers and members of management who have acquired significant experience
in operating an employment services company on an international level may cause
a significant disruption to our business. Moreover, the loss of our key managers
and field personnel may jeopardize existing client relationships with businesses
that continue to use our services based upon past relationships with these local
managers and field personnel. The loss of such key personnel could materially
adversely affect our operations, because it may result in an inability to
establish and maintain client relationships and otherwise operate our
business.
Foreign
currency fluctuations may have a material adverse effect on our operating
results.
We
conduct our operations in 82 countries and territories and the results of our
local operations are reported in the applicable foreign currencies and then
translated into U.S. Dollars at the applicable foreign currency exchange rates
for inclusion in our consolidated financial statements. During 2008,
approximately 89% of our revenues were generated outside of the United States,
the majority of which were generated in Europe. Furthermore, approximately
$749.0 million of our outstanding indebtedness as of December 31, 2008 was
denominated in foreign currencies. Because of devaluations and fluctuations in
currency exchange rates or the imposition of limitations on conversion of
foreign currencies into U.S. Dollars, we are subject to currency translation
exposure on the profits of our operations, in addition to economic exposure.
This exposure could have a material adverse effect on our business, financial
condition, cash flow and results of operations in the future because, among
other things, it could cause our reported revenues and profitability to decline
or debt levels and interest expense to increase.
17
As
of December 31, 2008 and 2007, we had $952.9 million and $914.5 million of total
debt, respectively. This level of debt could adversely affect our operating
flexibility and put us at a competitive disadvantage.
Our
level of debt and the limitations imposed on us by our credit agreements could
have important consequences for investors, including the following:
The
terms of our revolving credit facility permit additional borrowings, subject to
certain conditions. If new debt is added to our current debt levels, the related
risks we now face could intensify.
We
expect to obtain the money to pay our expenses, to repay borrowings under our
credit facility and to repay our other debt primarily from our operations. Our
ability to meet our expenses thus depends on our future performance, which will
be affected by financial, business, economic and other factors. We are not able
to control many of these factors, such as economic conditions in the markets
where we operate and pressure from competitors. The money we earn may not be
sufficient to allow us to pay principal and interest on our debt and to meet our
other debt obligations. If we do not have enough money, we may be required to
refinance all or part of our existing debt, sell assets or borrow additional
funds. We may not be able to take such actions on terms that are acceptable to
us, if at all. In addition, the terms of our existing or future debt agreements,
including the revolving credit facilities and our indentures, may restrict us
from adopting any of these alternatives.
18
Our
failure to comply with restrictive covenants under our revolving credit
facilities and other debt instruments could trigger prepayment
obligations.
Our
failure to comply with the restrictive covenants under our revolving credit
facilities and other debt instruments could result in an event of default,
which, if not cured or waived, could result in us being required to repay these
borrowings before their due date. If we are forced to refinance these borrowings
on less favorable terms, our results of operations and financial condition could
be adversely affected by increased costs and rates.
The
lenders under our and our subsidiaries’ credit facilities may be unwilling or
unable to extend credit to us on acceptable terms or at all.
Our
liquidity is dependent in part on our revolving credit facility, which is
provided by a syndicate of banks. Each bank in the syndicate is
responsible on a several, but not joint, basis for providing a portion of the
loans under the facility. If any of the participants in the syndicate
fails to satisfy its obligations to extend credit under the facility, the other
participants refuse or are unable to assume its obligations and we are unable to
find an alternative source of funding at comparable rates, our liquidity may be
adversely affected or our interest expense may increase
substantially.
Furthermore,
a number of our subsidiaries maintain uncommitted lines of credit with various
banks. Under the terms of these lines of credit, the bank is not
obligated to make loans to the subsidiary or to make loans to the subsidiary at
a particular interest rate. If any of these banks cancel these lines
of credit or otherwise refuse to extend credit on acceptable terms, we may need
to extend credit to those subsidiaries or the liquidity of our subsidiaries may
be adversely affected.
The
performance of our subsidiaries and their ability to distribute cash to our
parent company may vary, negatively affecting our ability to service our debt at
the parent company level or in other subsidiaries.
Since
we conduct a significant portion of our operations through our subsidiaries, our
cash flow and our consequent ability to service our debt depends in part upon
the earnings of our subsidiaries and the distribution of those earnings to our
parent company, or upon loans or other payments of funds by those subsidiaries
to our parent company or to other subsidiaries. The payment of such dividends
and the making of such loans and advances by our subsidiaries may be subject to
legal or contractual restrictions, depend upon the earnings of those
subsidiaries and be subject to various business considerations, including the
ability of such subsidiaries to pay such dividends or make such loans and
advances in a manner that does not result in substantial tax
liability.
We
are exposed to counterparty risk in our hedging arrangements.
From
time to time we enter into arrangements with other parties to hedge our exposure
to fluctuations in currency and interest rates, including forward contracts and
swap agreements. Recently, a number of financial institutions similar
to those that serve as counterparties to our hedging arrangements have been
adversely affected by the global credit crisis and in some cases have been
unable to fulfill their debts and other obligations. If any of the
counterparties to our hedging arrangements become unable to fulfill their
obligations to us, we may lose the financial benefits of these
arrangements. The fair value of our derivative financial instruments
related to interest rate swaps and foreign currency forward exchange contracts
reflected in our consolidated balance sheets as of December 31, 2008 were assets
of $2.7 million and liabilities of $18.5 million.
19
Our
inability to secure letters of credit on acceptable terms may substantially
increase our cost of doing business in various countries.
In
a number of countries in which we conduct business we are obligated to provide
guarantees or letters of credit to secure licenses, lease space or for insurance
coverage. We typically receive these guarantees and letters of
credits from a number of financial institutions around the world. In
the event that we are unable to secure these arrangements from a bank, lender or
other third party on acceptable terms, our liquidity may be adversely affected,
there could be a disruption to our business or there could be a substantial
increase in cost for our business.
The
price of our common stock may fluctuate significantly, which may result in
losses for investors.
The
market price for our common stock has been and may continue to be volatile. For
example, during 2008, the prices of our common stock as reported on the New York
Stock Exchange ranged from a high of $70.35 to a low of $23.60. Our stock price
can fluctuate as a result of a variety of factors, including factors listed in
these “Risk Factors” and others, many of which are beyond our control. These
factors include:
Because
of this volatility, we may fail to meet the expectations of our shareholders or
of securities analysts, and our stock price could decline as a
result.
20
Wisconsin
law and our articles of incorporation and bylaws contain provisions that could
make the takeover of our company more difficult.
Certain
provisions of Wisconsin law and our articles of incorporation and bylaws could
have the effect of delaying or preventing a third party from acquiring us, even
if a change in control would be beneficial to our shareholders. These provisions
of our articles of incorporation and bylaws include:
In
addition, the Wisconsin control share acquisition statute and Wisconsin’s “fair
price” and “business combination” provisions limit the ability of an acquiring
person to engage in certain transactions or to exercise the full voting power of
acquired shares under certain circumstances. These provisions and other
provisions of Wisconsin law could make it more difficult for a third party to
acquire us, even if doing so would benefit our shareholders. As a result, offers
to acquire us, which may represent a premium over the available market price of
our common stock, may be withdrawn or otherwise fail to be realized. The
provisions described above could cause our stock price to decline.
Improper
disclosure of employee and client data could result in liability and harm our
reputation.
Our
business involves the use, storage and transmission of information about our
employees, our clients and employees of our clients. We and our third
party service providers have established policies and procedures to help protect
the security and privacy of this information. It is possible that our
security controls over personal and other data and other practices we and our
third party service providers follow may not prevent the improper access to or
disclosure of personally identifiable or otherwise confidential
information. Such disclosure could harm our reputation and subject us
to liability under our contracts and laws that protect personal data and
confidential information, resulting in increased costs or loss of
revenue. Further, data privacy is subject to frequently changing
rules and regulations, which sometimes conflict among the various jurisdictions
and countries in which we provide services. Our failure to adhere to
or successfully implement processes in response to changing regulatory
requirements in this area could result in legal liability or impairment to our
reputation in the marketplace.
Outsourcing
certain aspects of our business could result in disruption and increased
costs.
We
have outsourced certain aspects of our business to third party vendors that
subject us to risks, including disruptions in our business and increased costs.
For example, we have engaged a third party to host and manage certain aspects of
our data center information and technology infrastructure. Accordingly, we are
subject to the risks associated with the vendor’s ability to provide information
technology services to meet our needs. Our operations will depend significantly
upon their and our ability to make our servers, software applications and
websites available and to protect our data from damage or interruption from
human error, computer viruses, intentional acts of vandalism, labor disputes,
natural disasters and similar events. If the cost of hosting and managing
certain aspects of our data center information technology structure is more than
expected, or if the vendor or we are unable to adequately protect our data and
information is lost or our ability to deliver our services is interrupted, then
our business and results of operations may be negatively impacted.
21
Not
applicable.
We
own properties at various locations worldwide, none of which are material. Most
of our operations are conducted from leased premises and we do not anticipate
any difficulty in renewing these leases or in finding alternative sites in the
ordinary course of business.
We
are involved in litigation of a routine nature and various legal matters, which
are being defended and handled in the ordinary course of business.
The
information required by this Item is set forth in our Annual Report to
Shareholders for the fiscal year ended December 31, 2008, under the heading
“Significant Matters Affecting Results of Operations” (pages 34 to 39), which
information is hereby incorporated herein by reference.
Not
applicable.
22
EXECUTIVE
OFFICERS OF MANPOWER
(as
of February 17, 2009)
23
OTHER
INFORMATION
Audit Committee Approval of
Audit-Related and Non-Audit Services
The
Audit Committee of our Board of Directors has approved the following
audit-related and non-audit services performed or to be performed for us by our
independent registered public accounting firm, Deloitte & Touche LLP,
in 2008:
24
PART
II
In
August 2007, the Board of Directors authorized the repurchase of
5.0 million shares of our common stock, not to exceed a total purchase
price of $400.0 million. The authorization permitted share repurchases from time
to time through a variety of methods, including open market purchases, block
transactions, privately negotiated transactions, accelerated share repurchase
programs, forward repurchase agreements or similar facilities. The following
table shows the total amount of shares repurchased under this authorization
during the fourth quarter of 2008.
(1)
Delivered by a director to Manpower, upon vesting, to satisfy tax withholding
requirements.
(2)
Not to exceed a total purchase price of $182.1 million.
The
remaining information required by this Item is set forth in our Annual Report to
Shareholders for the fiscal year ended December 31, 2008, under the heading
“Note 16 - Quarterly Data” (page 71) and “Corporate Information” (page 74) and
in our Proxy Statement for the Annual Meeting of Shareholders to be held on
April 28, 2009, under the caption “Equity Compensation Plan Information”,
which information is hereby incorporated herein by reference.
The
information required by this Item is set forth in our Annual Report to
Shareholders for the fiscal year ended December 31, 2008, under the heading
“Selected Financial Data” (page 72), which information is hereby incorporated
herein by reference.
The
information required by this Item is set forth in our Annual Report to
Shareholders for the fiscal year ended December 31, 2008, under the
headings “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” (pages 17 to 39), which information is hereby
incorporated herein by reference.
The
information required by this Item is set forth in our Annual Report to
Shareholders for the fiscal year ended December 31, 2008, under the heading
“Significant Matters Affecting Results of Operations” (pages 34 to 39), which
information is hereby incorporated herein by reference.
25
The
information required by this Item is set forth in the financial statements and
the notes thereto (pages 42 to 71) contained in our Annual Report to
Shareholders for the fiscal year ended December 31, 2008, which information
is hereby incorporated herein by reference.
Disclosure
Controls and Procedures
We
maintain a set of disclosure controls and procedures that are designed to ensure
that information required to be disclosed by us in the reports filed by us under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms. We carried out an evaluation, under the
supervision and with the participation of our management, including our Chairman
and Chief Executive Officer and our Executive Vice President and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on
that evaluation, our Chairman and Chief Executive Officer and our Executive Vice
President and Chief Financial Officer concluded that our disclosure controls and
procedures are effective as of the end of the period covered by this
report.
Internal
Control over Financial Reporting
The
Management Report on Internal Control Over Financial Reporting is set forth on
page 39 in our Annual Report to Shareholders for the fiscal year ended
December 31, 2008 which information is hereby incorporated herein by
reference. The Independent Registered Public Accounting Firm’s report with
respect to the effectiveness of internal control over financial reporting is
included on pages 40 and 41 of our Annual Report to Shareholders for the year
ended December 31, 2008 which information is hereby incorporated herein by
reference.
There
have been no changes in our internal control over financial reporting identified
in connection with the evaluation discussed above that occurred during our last
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
26
PART
III
The
information required by this Item is set forth in our Proxy Statement for the
Annual Meeting of Shareholders to be held on April 28, 2009, under the
caption “Executive and Director Compensation”; under the caption “Executive
Compensation Committee Interlocks and Insider Participation”; and under the
caption “Report of the Executive Compensation Committee of the Board of
Directors,” which information is hereby incorporated herein by
reference.
The
information required by this Item is set forth in our Proxy Statement for the
Annual Meeting of Shareholders to be held on April 28, 2009, under the
caption “Security Ownership of Certain Beneficial Owners” and under the caption
“Security Ownership of Management”; and under the caption “Equity Compensation
Plan Information,” which information is hereby incorporated herein by
reference.
The
information required by this Item is set forth in our Proxy Statement for the
Annual Meeting of Shareholders to be held on April 28, 2009, under the caption
“Meetings and Committees of the Board,” which information is hereby incorporated
herein by reference.
The
information required by this Item is set forth in our Proxy Statement for the
Annual Meeting of Shareholders to be held on April 28, 2009, under the
caption “Audit Committee Report,” which information is hereby incorporated
herein by reference.
27
PART
IV
(a)(1)
Financial Statements.
Report
of Independent Registered Public Accounting Firm on Financial Statement
Schedule
SCHEDULE
II—Valuation and Qualifying Accounts
Pursuant to Regulation S-K,
Item 601(b)(4)(iii), Manpower hereby agrees to furnish to the Commission,
upon request, a copy of each instrument and agreement with respect to long-term
debt of Manpower and its consolidated subsidiaries which does not exceed 10
percent of the total assets of Manpower and its subsidiaries on a consolidated
basis.
28
29
30
31
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Directors:
J. Thomas Bouchard, Marc J. Bolland, Gina R. Boswell, Cari M. Dominguez, Jack M.
Greenberg, Terry A. Hueneke, Ulice Payne, Jr., John R. Walter and Edward J.
Zore
32
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of Manpower Inc.:
We
have audited the consolidated financial statements of Manpower Inc. and
subsidiaries (the “Company”) as of December 31, 2008 and 2007 and for each
of the three years in the period ended December 31, 2008, and the Company’s
internal control over financial reporting as of December 31, 2008, and have
issued our reports thereon dated February 18, 2009; such consolidated
financial statements and reports are included in the 2008 Annual Report to
Shareholders and are incorporated herein by reference. Our audits also
included the consolidated financial statement schedule of the Company listed in
Item 15. This consolidated financial statement schedule is the
responsibility of the Company’s management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
33
SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS
For
the years ended December 31, 2008, 2007 and 2006, in millions:
Allowance
for Doubtful Accounts:
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