ManpowerGroup 2006 Annual Report Download - page 47

Manpower฀2006฀Annual฀Report ฀ 43
Notes฀to฀Consolidated฀Financial฀Statements฀
02. ฀
ACQ UISIT IONS฀AN D฀DISCO NTINU ED฀OPER ATIONS
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,฀$12.9฀and฀$117.3฀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฀฀
repayment฀of฀Right฀Management’s฀long-term฀debt,฀offset฀by฀cash฀acquired฀of฀approximately฀$39.5.฀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.฀
On฀January฀22,฀2004,฀we฀completed฀our฀exchange฀offer฀to฀acquire฀Right฀Management,฀the฀world’s฀largest฀career฀transition฀and฀
organizational฀consulting฀services฀firm,฀operating฀through฀over฀200฀offices฀in฀35฀countries.฀The฀results฀of฀Right฀Management’s฀
operations฀are฀included฀in฀our฀consolidated฀financial฀statements฀since฀that฀date.฀The฀acquisition฀of฀Right฀Management฀฀
expands฀the฀range฀of฀services฀that฀we฀offer฀to฀customers฀as฀a฀strategic฀partner฀throughout฀every฀stage฀of฀the฀employment฀฀
cycle.฀We฀have฀merged฀our฀Empower฀operations฀into฀Right฀Management,฀and฀the฀results฀of฀the฀combined฀entity฀are฀reported฀
as฀the฀Right฀Management฀segment.
Substantially฀all฀of฀Right฀Management’s฀outstanding฀shares฀were฀tendered฀and฀exchanged฀at฀a฀rate฀of฀0.3874฀of฀a฀share฀of฀our฀
common฀stock฀and฀cash฀was฀paid฀for฀fractional฀shares.฀The฀remaining฀outstanding฀shares฀were฀converted฀into฀the฀right฀to฀acquire฀
our฀common฀stock฀at฀the฀same฀exchange฀rate.฀We฀issued฀8,852,000฀shares฀of฀our฀common฀stock฀in฀the฀exchange.฀The฀value฀฀
of฀these฀shares฀was฀calculated฀based฀on฀an฀average฀share฀price฀over฀a฀2-day฀period฀prior฀to฀the฀completion฀of฀the฀transaction.฀
In฀connection฀with฀the฀acquisition฀of฀Right฀Management฀in฀2004,฀we฀established฀reserves฀for฀severance฀and฀other฀office฀lease฀
closure฀costs฀related฀to฀streamlining฀Right฀Management’s฀worldwide฀operations฀totaling฀$24.5.฀As฀of฀December฀31,฀2006,฀฀
approximately฀$22.0฀has฀been฀paid฀from฀these฀reserves,฀of฀which฀$2.6฀was฀paid฀in฀2006.฀The฀remaining฀$2.5,฀which฀primarily฀
represents฀future฀operating฀leases,฀will฀be฀paid฀by฀2008.
In฀connection฀with฀a฀European฀acquisition฀completed฀during฀the฀first฀quarter฀of฀2004,฀we฀established฀a฀reserve฀of฀$16.7฀for฀sever-
ance฀and฀other฀exit฀costs฀related฀to฀the฀acquired฀company.฀The฀full฀amount฀was฀paid฀from฀this฀reserve฀as฀of฀December฀31,฀2005.
Discontinued฀Operations
In฀January฀2006,฀we฀sold฀a฀non-core฀payroll฀processing฀business฀in฀Sweden.฀In฀addition,฀in฀December฀2006,฀we฀sold฀a฀฀
non-core฀facilities฀management฀services฀business฀in฀the฀Nordics.฀Pre-tax฀gains฀of฀$123.5฀($89.5฀after฀tax,฀or฀$1.02฀per฀share฀–฀
diluted)฀related฀to฀these฀sales฀were฀recorded฀in฀Income฀from฀Discontinued฀Operations฀in฀2006.฀The฀cash฀proceeds฀from฀the฀
sales฀of฀these฀operations฀of฀$123.9฀was฀received฀in฀2006.฀Also฀in฀December฀2006,฀we฀recorded฀a฀net฀loss฀of฀$1.7฀on฀the฀฀
disposal฀of฀one฀of฀our฀Right฀Management฀subsidiaries.฀We฀have฀recorded฀the฀results฀of฀these฀operations฀as฀discontinued฀฀
operations฀for฀the฀years฀ended฀December฀31,฀2006,฀2005฀and฀2004,฀respectively.
Summarized฀financial฀information฀for฀the฀discontinued฀operations฀is฀as฀follows:
Year฀Ended฀December฀31 2006 2005 2004
Revenues฀from฀services $฀ 224.0 $฀ 235.0 $฀ 255.0
Cost฀of฀services฀and฀Selling฀and฀administrative฀expenses 217.0 227.4 257.0
Earnings฀(loss)฀before฀income฀taxes 7.0 7.6 (2.0)
Provision฀for฀income฀taxes (2.5) (2.6) 0.4
Net฀gain฀on฀sale฀of฀businesses,฀net฀of฀income฀taxes฀of฀$34.0 87.8 — —
Income฀(loss)฀from฀discontinued฀operations,฀net฀of฀income฀taxes $฀ 92.3 $฀ 5.0 $฀ (1.6)