ManpowerGroup 2004 Annual Report Download - page 69

MANPOWER INC. 2004 Annual Report67
Derivative Financial Instruments
We account for our derivative instruments in accordance with SFAS Nos. 133, 137, and 149 related to “Accounting
for Derivative Instruments and Hedging Activities” (“SFAS 133, as amended”). Derivative instruments are recorded on
the balance sheet as either an asset or liability measured at their fair value. If the derivative is designated as a fair value
hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized
in earnings. If the derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value
of the derivative are recorded as a component of Accumulated Other Comprehensive Income and recognized in the
consolidated statements of operations when the hedged item affects earnings. Ineffective portions of changes in the
fair value of hedges are recognized in earnings.
Foreign Currency Translation
The financial statements of our non-U.S. subsidiaries have been translated in accordance with SFAS No. 52, “Foreign
Currency Translation” (“SFAS 52”). Under SFAS 52, asset and liability accounts are translated at the current exchange
rate and income statement items are translated at the weighted-average exchange rate for the year. The resulting trans-
lation adjustments are recorded as a component of Accumulated Other Comprehensive Income, which is included in
Shareholders’ Equity. In accordance with SFAS 109, no deferred taxes have been recorded related to the cumulative
translation adjustments.
Certain foreign currency denominated borrowings are accounted for as a hedge of our net investment in our subsidiaries
with the related functional currencies. Since our net investment in these subsidiaries exceeds the amount of the related
borrowings, all translation gains or losses related to these borrowings are included as a component of Accumulated
Other Comprehensive Income.
Shareholders’ Equity
In October 2004, the Board of Directors authorized the repurchase of 5 million shares of our common stock, not to exceed
a total purchase price of $250.0. 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. This repurchase authorization replaces
all previous authorizations. As of December 31, 2004, there were no shares repurchased under this authorization.
There were no share repurchases in 2003 and a total of 900,000 shares at a cost of $30.7 were repurchased in 2002
under a previous authorization.
Statement of Cash Flows
We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Stock Compensation Plans
We account for all of our fixed stock option plans and our 1990 Employee Stock Purchase Plan in accordance with APB
Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations (“APB 25”). No compensation
expense for employee stock options is reflected in Net Earnings as all options granted under those plans had an exercise
price equal to the market value of the underlying common stock on the date of grant. The following table (page 68) illus-
trates the effect on Net Earnings and Net Earnings Per Share if we had applied the fair value recognition provisions of
SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) to stock-based employee compensation.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
in millions, except share and per share data