ManpowerGroup 2008 Annual Report Download - page 61

59Manpower Annual Report 2008 Notes to Consolidated Financial Statements
As of December 31, 2007, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and
penalties, of $67.2, of which $3.1 was recorded as a current deferred tax liability. We had related tax benefits of $22.6, and
the net amount of $44.6 would have favorably affected the effective tax rate if recognized. There were no material settlements
in 2007.
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. We accrued net
interest and penalties of $0.3 during 2008. We have recorded a liability for potential interest and penalties of $1.6 as of
December 31, 2008.
The following table summarizes the activity related to our unrecognized tax benefits during 2008 and 2007:
2008 2007
Gross unrecognized tax benefits, beginning of year $ 60.5 $ 60.9
Increases in prior year tax positions 1.2 5.7
Decreases in prior year tax positions (5.9) (10.0)
Increases in current year tax positions 7.0 8.4
Expiration of statute of limitations for the assessment of taxes (13.5) (4.5)
Gross unrecognized tax benefits, end of year $ 49.3 $ 60.5
Potential interest and penalties 1.6 6.7
Balance, end of year $ 50.9 $ 67.2
We conduct business globally in 82 countries and territories. Accordingly, we are routinely audited by the various tax
jurisdictions in which we operate. Generally, the tax years that remain subject to examination are 2004 through 2008 for our
major operations in the U.S., France, the U.K., Germany, Italy and Japan. As of December 31, 2008, we are subject to tax audits
in France, the U.K. and the U.S., and we believe that resolution of such audits will not have a material impact on earnings.
06.
Accounts Receivable Securitization
We and certain of our U.S. subsidiaries have an agreement (the “Receivables Facility”) with a financial institution whereby we
may transfer on a continuous basis an interest in all eligible trade accounts receivable. Pursuant to the Receivables Facility,
we formed Ironwood Capital Corporation (“ICC”), a wholly owned, special purpose, bankruptcy-remote subsidiary that is
fully consolidated in our financial statements. ICC was formed for the sole purpose of transferring receivables that we and
certain of our subsidiaries generate. Under the Receivables Facility, we and certain of our subsidiaries, irrevocably and without
recourse, may transfer all of our accounts receivable to ICC. ICC, in turn, subject to certain conditions, may from time to time
transfer to a third party an undivided interest in these receivables and is permitted to receive advances of up to $100.0 for the
transfer of such undivided interest.
Under the Receivables Facility, ICC has the ability to repurchase, in full or in part, the accounts receivable it transferred to the
third party. Therefore, transfers made do not qualify for sale accounting, and accordingly, the receivables transferred to the
third party remain on our consolidated balance sheet with the corresponding advance being recorded as debt and amounts
charged on outstanding borrowings during the year are recorded as interest expense.
In July 2008, we amended the facility and elected to reduce the program’s amount from $200.0 to $100.0. With this
amendment, the liquidity fee increased to 70 basis points (0.70%) on the total program amount, with an additional increase to
95 basis points (0.95%) if the average program usage falls below a minimum level, the program fee increased to 30 basis
points (0.30%) and the maturity was extended to July 2009.
The interest rate for the Receivables Facility is variable and tied to A1+/P1 rated commercial paper. As of December 31, 2008,
there were borrowings of $64.0 outstanding under this program which are recorded as current maturities of long-term debt.
For the year ended December 31, 2008, the average interest rate was 3.1%, and we made a total interest payments of $0.9.
There were no borrowings outstanding as of December 31, 2007.
Under this amended agreement, if the accounting or regulatory standards change such that our bank is required to
consolidate the activities under the facility, then the total fee for this program increases to Libor plus 500 basis points (Libor +
5.0%). Under the previous agreement, we had a liquidity fee of 12.5 basis points (0.125%) and a program fee of 15 basis
points (0.15%).