ManpowerGroup 2004 Annual Report Download - page 76

2004 Annual Report MANPOWER INC.74
Pretax income of foreign operations was $170.9, $169.5, and $162.9 in 2004, 2003 and 2002, respectively. We have
not provided United States income taxes and foreign withholding taxes on $339.5 of unremitted earnings of foreign
subsidiaries that is considered to be reinvested indefinitely. Deferred taxes are provided on unremitted earnings of
foreign subsidiaries when we determine that we may remit the earnings. As of December 31, 2004, we have recorded
a deferred tax liability of $9.5 related to foreign earnings that may be remitted.
On October 22, 2004, the President signed the American Jobs Creation Act of 2004, (the “Jobs Act”). The Jobs
Act creates a temporary incentive for United States corporations to repatriate accumulated earnings from foreign
subsidiaries by providing an 85% dividends received deduction for certain dividends from controlled foreign corporations.
The deduction is subject to a number of limitations and, as of today, uncertainty remains as to how to interpret numerous
provisions of the Jobs Act. 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.
We have tax contingencies recorded related to items in various countries, which are included in Other Long-Term
Liabilities. These reserve balances will be adjusted to the extent that these items are settled for amounts different than
the amounts we have recorded. In 2004, we received notification that income tax audits for certain years have been
completed. Based on the results of these audits, we reversed a tax contingency of $8.0 to income in the third quarter
of 2004 ($0.08 per diluted share).
05.
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, a wholly owned, special purpose, bankruptcy-remote
subsidiary (“ICC”) 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 an undivided interest in these receivables and is permitted
to receive advances of up to $200.0 for the transfer of such undivided interest. The agreement was amended in July
2004 to extend the expiration to July 2005 and it may be extended further with the financial institution’s consent.
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.
No amounts were advanced under this facility as of December 31, 2004 and 2003.
Costs associated with the transfer of receivables primarily relate to the discount and fees associated with the amounts
advanced. Such costs were $0.4 in each of 2004, 2003, and 2002 respectively, and were recorded as other expenses
in the consolidated statements of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
in millions, except share and per share data