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MANPOWER INC. 2004 Annual Report55
The changes in fair value of our market sensitive instruments due to changes in interest rates, and changes in foreign
currency exchange rates for the 150 million Swaps, is as follows:
Market Sensitive Instrument 10% Decrease 10% Increase
Fixed Rate Debt:
Zero-coupon convertible debentures $ 30.0(1) $ (30.0)(1)
200 million, 5.63% Notes due July 2006 28.2(1) (28.2)(1)
150 million, 6.25% Notes due March 2005 20.5 (20.5)
Derivative Instruments:
150 million Swaps (20.3) 20.3
100 million Interest Rate Swaps (1.8) 1.8
(1) This change in fair value is not recorded in the financial statements, however disclosure of the fair value is included in note 7 to the consolidated financial statements.
Impact of Economic Conditions
One of the principal attractions of using temporary staffing solutions is to maintain a flexible supply of labor to meet
changing economic conditions. Therefore, the industry has been and remains sensitive to economic cycles. To help
minimize the effects of these economic cycles, we offer customers a continuum of services to meet their needs
throughout the employment and business cycle. We believe that the breadth of our operations and the diversity of our
service mix cushion us against the impact of an adverse economic cycle in any single country or industry. However,
adverse economic conditions in any of our largest markets, or in several markets simultaneously, would have a material
impact on our consolidated financial statements.
Legal Regulations
The temporary employment services industry is closely regulated in all of the major markets in which we operate except
the United States and Canada. Many countries impose licensing or registration requirements, substantive restrictions on
temporary employment services, either on the temporary staffing company or the ultimate client company, or minimum
benefits to be paid to the temporary employee either during or following the temporary assignment. Regulations also
may restrict the length of temporary assignments, the type of work permitted for temporary workers or the occasions
on which temporary workers may be used. Changes in applicable laws or regulations have occurred in the past and are
expected in the future to affect the extent to which temporary employment services firms may operate. These changes
could impose additional costs, taxes, record keeping or reporting requirements; restrict the tasks to which temporaries
may be assigned; limit the duration of or otherwise impose restrictions on the nature of the temporary relationship (with us
or the customer); or otherwise adversely affect the industry. Our career transition and organizational consulting services
are currently not regulated.
In many markets, the existence or absence of collective bargaining agreements with labor organizations has a significant
impact on our operations and the ability of customers to utilize our services. In some markets, labor agreements are
structured on a national or industry-wide (rather than a company) basis. Changes in these collective labor agreements
have occurred in the past, are expected to occur in the future, and may have a material impact on the operations of
temporary staffing firms, including us.
MANAGEMENT’S DISCUSSION AND ANALYSIS
of financial condition and results of operations