ManpowerGroup 2008 Annual Report Download - page 30

28 Management’s Discussion & Analysis Manpower Annual Report 2008
Management’s Discussion & Analysis
of financial condition and results of operations
Our principal ongoing cash needs are to finance working capital, capital expenditures, debt payments, share repurchases,
dividends 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 2008, cash provided by operating activities was $792.0 million, compared to $432.2 million for 2007 and $359.1
million for 2006. The increase in 2008 from 2007 is primarily attributable to the change in working capital, as accounts
receivable has declined due to the decrease in business volumes.
Accounts Receivable decreased to $3,629.7 million as of December 31, 2008 from $4,478.8 million as of December 31,
2007. This decrease is due primarily to changes in foreign currency exchange rates and decreased business volumes. At
constant exchange rates, the Accounts Receivable balance at December 31, 2008 would have been approximately $320.4
million higher than reported.
Capital expenditures were $93.1 million, $91.6 million and $80.0 million during 2008, 2007 and 2006, 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 $6.3 million, $7.5 million and $12.0 million in 2008,
2007 and 2006, respectively.
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, $122.8 million and $13.0 million in 2008, 2007 and
2006, respectively.
In April 2008, we acquired Vitae, a leading professional placement firm in the Netherlands, for total consideration, net of cash
acquired, of $114.7 million (€72.6 million). The agreement also included contingent consideration of up to €10.0 million that
may be paid in 2010. Goodwill and Intangible Assets resulting from this transaction were $85.4 million and $23.6 million,
respectively, as of December 31, 2008.
Cash consideration related to other acquisitions, including franchises, net of cash acquired, was $127.3 million, $122.8
million and $13.0 million for 2008, 2007 and 2006, respectively. Goodwill and Intangible Assets resulting from these
acquisitions were $55.1 million and $69.4 million, respectively, as of December 31, 2008.
In January 2006, we sold a non-core payroll processing business in Sweden. In December 2006, we also sold a non-core
facilities management services business in the Nordics. Pre-tax gains of $123.5 million ($89.5 million after tax, or $1.02 per
diluted share) related to these sales were recorded in 2006. Net proceeds from these transactions of $123.9 million were
received in 2006.
Net additional borrowings were $79.0 million for 2008 compared to $4.9 million and $2.2 million for 2007 and 2006,
respectively. We use excess cash to pay down borrowings under various facilities when appropriate.
In August 2007, October 2006 and October 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 $400.0 million, $325.0 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. Under the 2007 authorization, we have repurchased 2.2 million and 1.7 million
shares of common stock during 2008 and 2007, respectively, at a total cost of $112.2 million and $105.7 million during 2008
and 2007, respectively. There are 1.1 million shares, at a cost of up to $182.1 million, remaining authorized for repurchase
under this authorization as of December 31, 2008. 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 first eight months of 2006.
During each of 2008, 2007 and 2006, the Board of Directors declared total cash dividends of $0.74, $0.69 and $0.59 per
share, respectively resulting in total dividend payments of $58.1 million, $57.1 million and $50.9 million, respectively.