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฀ 21Management’s฀Discussion฀&฀Analysis Manpower฀2006฀Annual฀Report
CASH฀SOURCES฀AND฀USES
Cash฀used฀to฀fund฀our฀operations฀is฀primarily฀generated฀through฀operating฀activities฀and฀our฀existing฀credit฀facilities.฀We฀believe฀
that฀our฀internally฀generated฀funds฀and฀our฀existing฀credit฀facilities฀are฀sufficient฀to฀cover฀our฀near-term฀projected฀cash฀needs.
Our฀principal฀ongoing฀cash฀needs฀are฀to฀finance฀working฀capital,฀capital฀expenditures,฀debt฀payments,฀share฀repurchases฀and฀
acquisitions.฀Working฀capital฀is฀primarily฀in฀the฀form฀of฀trade฀receivables,฀which฀generally฀increase฀as฀revenues฀increase.฀The฀
amount฀of฀financing฀necessary฀to฀support฀revenue฀growth฀depends฀on฀receivables฀turnover,฀which฀differs฀in฀each฀market฀where฀
we฀operate.
During฀2006,฀cash฀provided฀by฀operating฀activities฀was฀$359.1฀million,฀compared฀to฀$268.8฀million฀for฀2005฀and฀$188.3฀million฀
for฀2004.฀The฀change฀in฀2006฀from฀2005฀is฀due฀to฀the฀higher฀earnings฀level฀and฀an฀improved฀working฀capital฀position.
Accounts฀Receivable฀increased฀to฀$3,837.2฀million฀as฀of฀December฀31,฀2006฀from฀$3,208.2฀million฀as฀of฀December฀31,฀2005.฀
This฀increase฀is฀due฀primarily฀to฀changes฀in฀foreign฀currency฀exchange฀rates฀and฀increased฀business฀volumes.฀At฀constant฀฀
exchange฀rates,฀the฀Accounts฀Receivable฀balance฀at฀December฀31,฀2006฀would฀have฀been฀approximately฀$314.0฀million฀lower฀
than฀reported.฀Days฀Sales฀Outstanding฀(“DSO”)฀remained฀relatively฀stable฀during฀2006,฀decreasing฀slightly฀from฀2005.
Capital฀expenditures฀were฀$80.0฀million,฀$77.6฀million฀and฀$67.9฀million฀during฀2006,฀2005฀and฀2004,฀respectively.฀These฀฀
expenditures฀were฀primarily฀comprised฀of฀purchases฀of฀computer฀equipment,฀office฀furniture฀and฀other฀costs฀related฀to฀office฀
openings฀and฀refurbishments,฀as฀well฀as฀capitalized฀software฀costs฀of฀$12.0฀million,฀$6.5฀million฀and฀$2.7฀million฀in฀2006,฀2005฀
and฀2004,฀respectively.
From฀time฀to฀time,฀we฀acquire฀and฀invest฀in฀companies฀throughout฀the฀world,฀including฀franchises.฀The฀total฀cash฀consideration฀
paid฀for฀acquisitions฀was฀$13.0฀million,฀$12.9฀million฀and฀$117.3฀million฀in฀2006,฀2005฀and฀2004,฀respectively.฀The฀2004฀
amount฀includes฀amounts฀related฀to฀the฀acquisition฀of฀Right฀Management,฀including฀the฀payment฀of฀acquisition-related฀costs฀
and฀the฀$123.8฀million฀repayment฀of฀Right฀Management’s฀long-term฀debt,฀offset฀by฀and฀cash฀acquired฀of฀approximately฀$39.5฀
million.฀We฀financed฀the฀acquisition-related฀costs฀and฀the฀debt฀repayment฀with฀excess฀cash฀and฀borrowings฀under฀our฀U.S.฀
Receivables฀Facility฀which฀were฀repaid฀in฀2004.฀
In฀January฀2006,฀following฀approval฀from฀the฀Swedish฀Competition฀Authorities,฀we฀sold฀a฀non-core฀payroll฀processing฀business฀
in฀Sweden.฀In฀addition,฀in฀December฀2006,฀we฀sold฀our฀Nordic฀non-core฀facilities฀management฀services฀business.฀Pre-tax฀
gains฀of฀$123.5฀million฀($89.5฀million฀after฀tax,฀or฀$1.02฀per฀share฀–฀diluted)฀related฀to฀these฀sales฀were฀recorded฀in฀2006.฀Net฀
proceeds฀from฀these฀transactions฀of฀$123.9฀million฀were฀received฀in฀2006.฀
Net฀debt฀borrowings฀were฀$2.2฀million฀for฀2006,฀compared฀to฀repayments฀of฀$31.8฀million฀for฀2005฀and฀borrowings฀of฀$5.7฀฀
million฀for฀2004.฀We฀use฀excess฀cash฀to฀pay฀down฀borrowings฀under฀various฀facilities฀when฀appropriate.
In฀October฀2006,฀the฀Board฀of฀Directors฀authorized฀the฀repurchase฀of฀5.0฀million฀shares฀of฀our฀common฀stock,฀not฀to฀exceed฀a฀
total฀purchase฀price฀of฀$325.0฀million.฀In฀each฀of฀October฀2004฀and฀2005,฀the฀Board฀of฀Directors฀authorized฀the฀repurchase฀of฀
5.0฀million฀shares฀of฀our฀common฀stock,฀not฀to฀exceed฀a฀total฀purchase฀price฀of฀$250.0฀million.฀Share฀repurchases฀may฀฀
be฀made฀from฀time฀to฀time฀and฀may฀be฀implemented฀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฀repurchases฀under฀the฀2004฀authorization฀were฀completed฀in฀2005฀and฀the฀repurchases฀under฀the฀2005฀
authorization฀were฀completed฀during฀2005฀and฀the฀first฀eight฀months฀of฀2006.฀We฀repurchased฀the฀entire฀5.0฀million฀shares฀of฀
common฀stock฀at฀a฀total฀cost฀of฀$203.5฀million฀under฀the฀2004฀authorization฀and฀4.3฀million฀shares฀at฀a฀total฀cost฀of฀$250.0฀฀
million฀under฀the฀2005฀authorization.฀There฀were฀no฀share฀repurchases฀in฀2004฀and฀there฀were฀no฀repurchases฀under฀the฀2006฀
authorization฀as฀of฀December฀31,฀2006.
During฀each฀of฀2006,฀2005฀and฀2004,฀the฀Board฀of฀Directors฀declared฀total฀cash฀dividends฀of฀$0.59,฀$0.47฀and฀$0.30฀per฀share,฀฀
respectively.฀Our฀total฀dividend฀payments฀were฀$50.9฀million,฀$41.2฀million฀and฀$27.1฀million฀in฀2006,฀2005฀and฀2004,฀respectively.