ManpowerGroup 2004 Annual Report Download - page 58

2004 Annual Report MANPOWER INC.56
A search warrant was executed on November 30, 2004, at our French headquarters authorizing the French Regional
Director on Inquiries of Competition to enter the office and review and obtain documents that may be pertinent to the
investigation. According to the search warrant, the investigation stems from a complaint submitted during 2003 to the
European Commission and subsequently transferred to France’s Direction Generale de la Concurrence, de la
Consommation et de la Repression des Fraudes. We understand that the purpose of the investigation is to search for
evidence of price fixing and allocation of market share within the French market. The investigation is continuing and we
currently are not able to predict the outcome.
In 2002, the European Commission released proposed legislation, the Agency Workers Directive (“AWD”), aimed at
improving the quality of temporary staffing work through a principle of non-discrimination between temporary staff and
permanent employees. The AWD has been returned to a consultation and revision phase by the Commission and is the
subject of strong debate and suggested amendment by a number of member states. The AWD will be discussed in the
future, but given the uncertainty surrounding the AWD, we cannot currently estimate the impact, if any, on the future
results of our European operations or our consolidated financial statements.
Recently Issued Accounting Standards
During May 2004, the FASB (Financial Accounting Standards Board) issued FASB Staff Position (“FSP”) No. 106-2,
“Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization
Act of 2003” (“FSP 106-2”), which provides guidance on accounting for the effects of the new Medicare prescription
drug legislation (“the Act”). The Act, which was signed into law on December 8, 2003, introduces a prescription drug
benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans
that provide a benefit that is at least actuarially equivalent to Medicare Part D. FSP 106-2 was adopted by us in the
third quarter of 2004 and did not have a material impact on our consolidated financial statements.
During September 2004, the Emerging Issues Task Force (“EITF”) issued Issue No. 04-8, “The Effect of Contingently
Convertible Debt on Diluted Earnings Per Share” (“EITF 04-8”), which requires the effect of contingently convertible
debt securities with a market price trigger to be included in the calculation of diluted earnings per share, using the
“if-converted” method, regardless of whether the market price trigger has been met. EITF 04-8 also requires that
previously reported diluted earnings per share be restated. We adopted EITF 04-8 in the fourth quarter of 2004. (See
note 3 to our consolidated financial statements for further information.)
During December 2004, the FASB issued SFAS No. 123R “Share-Based Payment” (“SFAS 123R”), which replaces
SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) and supercedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including
grants of employee stock options, to be recognized as expense in the financial statements based on their fair values
beginning with the first interim or annual period after June 15, 2005, with early adoption encouraged. The pro forma
disclosures previously permitted under SFAS 123 will no longer be an alternative to expense recognition. We will adopt
SFAS 123R using the modified-prospective method in the third quarter of 2005. We expect SFAS 123R will have
approximately a $0.06 per share impact on Net Earnings Per Share – Diluted in the second half of 2005.
During December 2004, the FASB issued FSP No. 109-2, “Accounting and Disclosure Guidance for the Foreign
Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”), which provides guidance
on accounting for the potential impact of the repatriation provisions of the American Jobs Creation Act of 2004 (the
“Jobs Act”) on enterprises’ income tax expense and deferred tax liability. The Jobs Act was enacted on October 22,
2004. FSP 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate
the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS
109. Based on our analysis to date, we are not yet in a position to decide on whether, or to what extent, we might
repatriate foreign earnings under the provisions of the Jobs Act. However, we expect to be in a position to finalize our
assessment by June 2005.
MANAGEMENT’S DISCUSSION AND ANALYSIS
of financial condition and results of operations