ManpowerGroup 2001 Annual Report Download - page 28

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Fair Value of Debt
Due to the availability of long-term financing, commercial paper borrowings have been classified as Long-term debt. The carrying value of Long-term
debt approximates fair value, except for the Euro denominated notes and the Debentures, which had a fair value at December 31, as follows:
2001 2000
Euro denominated notes $ 312.4 $ 327.6
Zero-coupon convertible debentures 255.0 –
Debt Maturities
The maturities of long-term debt payable within each of the four years subsequent to December 31, 2002 are as follows: 2003 – $6.5, 2004 – $8.6,
2005 – $135.1 and 2006 – $413.5 and thereafter – $247.4.
06 Stock Compensation Plans
The Company accounts for all of its fixed stock option plans and the 1990 Employee Stock Purchase Plan in accordance with APB Opinion No. 25 and
related Interpretations. Accordingly, no compensation cost related to these plans was charged against earnings in 2001, 2000, and 1999. Had the
Company determined compensation cost consistent with the method of SFAS No. 123, the Company’s Net earnings and Net earnings per share would
have been reduced to the pro forma amounts indicated as follows:
2001 2000 1999
Net earnings:
As reported $ 124.5 $ 171.2 $ 150.0
Pro forma 119.4 167.9 146.4
Net earnings per share:
As reported $ 1.64 $ 2.26 $ 1.94
Pro forma 1.58 2.22 1.90
Net earnings per share – diluted:
As reported $ 1.62 $ 2.22 $ 1.91
Pro forma 1.56 2.18 1.86
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2001, 2000 and 1999, respectively: risk-free interest rates of 4.6%, 5.8% and 5.6%; expected volatility of 17.7%,
19.2% and 17.2%; dividend yield of .5% in all years; and expected lives of 7.2 years, 5.8 years and 7.6 years. The weighted-average fair value of
options granted was $7.16, $6.46 and $6.16 in 2001, 2000 and 1999, respectively.
Fixed Stock Option Plans
The Company has reserved 11,375,000 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 and non-employee directors are eligible to receive stock options, stock appreciation rights, cash equivalent
rights, 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 stock appreciation right is determined by the committee. 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. As of December 31,
2001, no stock appreciation rights, cash equivalent rights or purchase rights were outstanding.
All non-employee directors of the Company may receive an option to purchase shares of the Company’s common stock in lieu of cash compensation.
The number of shares covered by the option is determined pursuant to a formula set forth in the plan. The directors also receive an annual option grant
as additional compensation for service. The per share purchase price for each option awarded is equal to the fair market value of the Company’s common
stock at the date of grant. Options are exercisable for the vested portion during the director’s tenure and a limited period thereafter.
The value of restricted stock granted under the plans is charged to equity and amortized to expense over the restriction period. There were 24,301 and
10,000 restricted shares granted during 2001 and 2000, respectively. As of December 31, 2001 there were 30,301 restricted shares not vested.
The Company has reserved 698,398 shares of common stock for issuance under the 1991 Directors Stock Option Plan. The Company no longer grants
options under this plan.
The Company also has the Savings Related Share Option Scheme for United Kingdom employees with at least one year of service. The employees are
offered the opportunity to obtain an option for a specified number of shares of common stock at not less than 85% of their market value on the day
prior to the offer to participate in the plan. Options vest after either 3, 5, or 7 years, but may lapse earlier. Funds used to purchase the shares are
accumulated through specified payroll deductions over a 60-month period.
Information related to options outstanding under the plans, and the related weighted-average exercise prices, is as follows:
2001 2000 1999
shares (000) price shares (000) price shares (000) price
Options outstanding, beginning of period 5,341 $ 25 4,371 $ 23 3,840 $ 21
Granted 722 31 1,385 30 1,119 26
Exercised (357) 16 (279) 19 (496) 17
Expired or cancelled (269) 28 (136) 32 (92) 25
Options outstanding, end of period 5,437 $ 26 5,341 $ 25 4,371 $ 23
Options exercisable, end of period 3,280 $ 24 2,268 $ 21 2,055 $ 20
Options outstanding as of December 31, 2001 are as follows:
options outstanding options exercisable
weighted -
average
remaining weighted - weighted -
contractual average average
exercise prices shares (000) life exercise price shares (000) exercise price
$10-$20 1,126 2.1 $ 16 1,126 $ 16
21-25 1,316 7.0 23 897 23
26-30 1,767 8.3 29 695 28
31-41 1,228 7.4 34 562 35
5,437 6.5 $ 26 3,280 $ 24
Other Stock Plans
The Company has reserved 2,250,000 shares of common stock for issuance under the 1990 Employee Stock Purchase Plan. Under the plan, designated
Manpower employees meeting certain service requirements may purchase shares of the Company’s common stock through payroll deductions. These
shares may be purchased at the lesser of 85% of their fair market value at the beginning or end of each year. During 2001, 2000 and 1999, 67,000,
80,000 and 138,500 shares, respectively, were purchased under the plan.
Notes to Consolidated Financial Statements (continued)
— in millions, except per share data —