ManpowerGroup 2008 Annual Report Download - page 49

47Manpower Annual Report 2008 Notes to Consolidated Financial Statements
Bad debt expense is recorded as Selling and Administrative Expenses in our consolidated statements of operations and was
$23.4, $21.8 and $27.4 in 2008, 2007 and 2006, respectively. Factors that would cause this provision to increase primarily
relate to increased bankruptcies by our clients and other difficulties collecting amounts billed. On the other hand, an improved
write-off experience and aging of receivables would result in a decrease to the provision. Write-offs were $21.5, $20.8 and
$14.1 for 2008, 2007 and 2006, respectively.
ADVERTISING COSTS
We expense production costs of advertising as they are incurred. Advertising expenses were $62.6, $69.5 and $69.4 in
2008, 2007 and 2006, respectively.
EMPLOYMENT-RELATED ITEMS
In April 2007, we received a letter from the Central Agency For Social Security Organizations in France (“Central Agency”)
regarding a modification to the calculation of payroll taxes under certain French social programs aimed at encouraging the
employment of low-wage workers. This modification reduced the amount of payroll taxes that we are required to remit
retroactive to January 1, 2006. In July 2007, the French Senate passed an amendment to this social security legislation,
which eliminated the payroll tax benefit resulting from the modification effective October 1, 2007.
Included in 2007 is $149.6 ($88.6 after tax, or $1.05 per diluted share) of net benefit related to this modification, including an
increase to Gross Profit of $157.1 and an increase to Selling and Administrative Expenses of $7.5. The proceeds related to
this modification for a portion of 2006 and all of 2007 have been received in 2007. The remaining proceeds for 2006 were
received in 2008.
In April 2008, we received additional information, which was based on communications with the Central Agency indicating
that this modification is also applicable to 2005. Therefore, we recorded $68.2 ($43.8 after tax, or $0.55 per diluted share) of
a net benefit to Gross Profit in 2008 related to this modification. The proceeds for a majority of 2005 have been received. The
remaining proceeds for 2005 are expected to be received in 2009.
REORGANIZATION COSTS
In the fourth quarter of 2008, we recorded a restructuring charge of $37.2, primarily related to office closures and
consolidations, and severance costs in several countries. As of December 31, 2008, $8.4 has been paid. We expect a
majority of the remaining $28.8 will be paid in 2009.
In the fourth quarter of 2007, we established reserves totaling $4.4 in France for office closure costs and $4.0 at Jefferson
Wells for severances and other office closure costs related to reorganizations at these entities. Payments against the $4.4
reserve in France started in 2008 and have totaled $2.6 as of December 31, 2008. We expect a majority of the remaining $1.8
will be paid in 2009. Of the $4.0 accrued at Jefferson Wells, $3.7 has been paid as of December 31, 2008, of which $3.6 was
paid during 2008. We expect a majority of the remaining $0.3 will be paid in 2009.
In 2006, we recorded expenses totaling $9.5 related to reorganizations in the U.K. for severance and other office closure
costs. As of December 31, 2008, $8.6 has been paid, of which $1.3 was paid during 2008. We expect a majority of the
remaining $0.9 will be paid in 2009. In 2006, we also recorded expenses totaling $6.9 at Right Management for severance
costs, of which $1.6 was reversed in 2007 as fewer than expected former employees had claimed the severance. As of
December 31, 2008, $5.2 has been paid, of which $0.4 was paid during 2008. We expect the remaining $0.1 will be paid in 2009.
INCOME TAXES
We account for income taxes in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” Deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their respective tax basis, and net operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. We record a valuation allowance
against deferred tax assets for which utilization of the asset is not likely.
ACCOUNTS RECEIVABLE SECURITIZATION
We account for the securitization of accounts receivable in accordance with FASB Statement No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (“SFAS 140”). Accordingly, transfers of
receivables are evaluated for sale accounting treatment and, if such a transfer qualifies as a sale under SFAS 140, the related
receivable balance is removed from our consolidated balance sheets and the loss related to the transfer is recorded as other