ManpowerGroup 2007 Annual Report Download - page 25

Management’s Discussion & Analysis22 Manpower 2007 Annual Report
Management’s Discussion & Analysis
of financial condition and results of operations
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 suffi cient to cover our near-term projected cash needs.
Our principal ongoing cash needs are to fi nance 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 fi nancing necessary to support revenue growth depends on receivables turnover, which differs in each market where
we operate.
During 2007, cash provided by operating activities was $432.2 million, compared to $359.1 million for 2006 and $268.8 million
for 2005. The change in 2007 from 2006 is due to the higher earnings level offset by increased working capital needs.
Accounts Receivable increased to $4,478.8 million as of December 31, 2007 from $3,837.2 million as of December 31, 2006.
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, 2007 would have been approximately $320.5 million lower
than reported. Days Sales Outstanding (”DSO”) improved by one day during 2007, following a slight improvement in 2006.
Capital expenditures were $91.6 million, $80.0 million and $77.6 million during 2007, 2006 and 2005, respectively. These
expenditures were primarily comprised of purchases of computer equipment, offi ce furniture and other costs related to offi ce
openings and refurbishments, as well as capitalized software costs of $7.5 million, $12.0 million and $6.5 million in 2007, 2006
and 2005, respectively.
From time to time, we acquire and invest in companies throughout the world, including franchises. The total cash consideration
paid for acquisitions was $122.8 million, primarily related to franchise acquisitions, $13.0 million and $12.9 million in 2007,
2006 and 2005, respectively.
In January 2006, we sold a non-core payroll processing business in Sweden, and 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 $4.9 million for 2007, compared to $2.2 million for 2006 and net repayments of $31.8 million for
2005. We use excess cash to pay down borrowings under various facilities when appropriate.
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. In October 2006, 2005 and 2004, 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, $250.0 million and $250.0
million, respectively. 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. As of December 31, 2007, we have repurchased 1.7 million
shares at a total cost of $105.7 million under the 2007 authorization. Under the 2006 authorization, we repurchased 4.4 million
shares of common stock at a total cost of $325.0 million during 2007. Under the 2005 authorization, we repurchased 4.3 million
shares at a total cost of $250.0 million during 2005 and the fi rst eight months of 2006. Under the 2004 authorization, we
repurchased 5.0 million shares at a total cost of $203.5 million during 2005.
During each of 2007, 2006 and 2005, the Board of Directors declared total cash dividends of $0.69, $0.59 and $0.47 per share,
respectively. Our total dividend payments were $57.1 million, $50.9 million and $41.2 million in 2007, 2006 and 2005, respectively.
We have aggregate commitments of $2,088.6 million related to debt, operating leases, severances and offi ce closure costs,
and certain other commitments, as follows:
in Millions 2008 2009 2010 2011 2012 Thereafter
Long-term debt including interest $ 41.5 $ 42.2 $ 163.5 $ 33.6 $ 459.4 $ 296.9
Short-term borrowings 39.0 —————
Operating leases 211.3 174.8 134.8 87.9 64.4 182.2
Severances and other offi ce closure costs 11.1 1.9 0.3 0.3 — —
FIN 48 income tax(1) 3.1—————
Other 34.0 21.9 18.3 13.0 12.5 20.7
$ 340.0 $ 240.8 $ 336.9 $ 134.8 $ 536.3 $ 499.8
(1) FIN 48 income tax, interest and penalties of $41.5 million is excluded as we cannot determine the years in which these liabilities might ultimately settle.