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MANPOWER INC. 2004 Annual Report85
fluctuations. Changes in the fair value hedge and the fair value of the notes throughout the contract term will be reflected
in the consolidated statements of operations. These instruments had a $4.7 favorable impact on interest expense in
2004, a $5.0 favorable impact in 2003, and an immaterial impact in 2002. Any ineffectiveness on the swaps is recorded
in the consolidated statements of operations and was immaterial for 2004, 2003, and 2002.
We have various interest rate swap agreements to fix our interest costs on a portion of our Euro-denominated variable
rate borrowings. The Euro interest rate swap agreements have a notional value of 100.0 ($135.5), which fix the interest
rate, on a weighted-average basis, at 5.7% and expire in 2010. Such contracts have been designated as cash flow
hedges and were considered highly effective, as defined by SFAS 133, as amended, as of December 31, 2004. For
the years ended December 31, 2004, 2003 and 2002 these instruments increased interest expense by $4.6, $3.9, and
$2.3, respectively.
During March 2003, we terminated our interest rate swap agreement with a notional value of ¥4,000.0 ($34.0), which
was scheduled to expire in June 2003 for $0.1. In September 2003, we terminated our interest rate swap agreement
with a notional value of ¥4,150.0 ($36.1), which was scheduled to expire in 2006 for $0.5.
Fair Value of Derivative Financial Instruments
The fair value of our derivative financial instruments are reflected in the consolidated balance sheets as follows:
December 31 2004 2003
Other assets:
150.0 Swaps $ 64.5 $ 52.0
Other long-term liabilities:
100.0 Interest Rate Swaps (18.4) (14.4)
Forward contracts —(0.4)
$ 46.1 $ 37.2
14.
CONTINGENCIES
Litigation
We are involved in a number of lawsuits arising in the ordinary course of business which will not, in the opinion of man-
agement, have a material effect on our consolidated financial statements.
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.
Guarantees
We have entered into certain guarantee contracts and stand-by letters of credit that total $115.3 ($37.6 for guarantees
and $77.7 for stand-by letters of credit). The guarantees primarily relate to indebtedness, bank accounts and leases.
The stand-by letters of credit relate to workers’ compensation, operating leases and indebtedness. If certain conditions were
met under these arrangements, we would be required to satisfy our obligation in cash. Due to the nature of these arrange-
ments and our historical experience, we do not expect to make any significant payments under these arrangements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
in millions, except share and per share data