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฀ 25Management’s฀Discussion฀&฀Analysis Manpower฀2006฀Annual฀Report
We฀used฀a฀weighted-average฀discount฀rate฀of฀5.8%฀for฀the฀U.S.฀plans฀and฀4.6%฀for฀the฀non-U.S.฀plans฀in฀determining฀the฀฀
estimated฀pension฀expense฀for฀2007.฀These฀rates฀compare฀to฀the฀5.5%฀and฀4.6%฀weighted-average฀discount฀rates฀for฀the฀
U.S.฀plans฀and฀non-U.S.฀plans,฀respectively,฀used฀in฀determining฀the฀estimated฀pension฀expense฀for฀2006,฀and฀reflect฀the฀current฀
interest฀rate฀environment.฀Absent฀any฀other฀changes,฀a฀25฀basis฀point฀change฀in฀the฀weighted-average฀discount฀rate฀would฀฀
impact฀consolidated฀pension฀expense฀by฀approximately฀$0.1฀million฀for฀the฀U.S.฀plans฀and฀$0.9฀million฀for฀the฀non-U.S.฀plans.฀
We฀have฀selected฀a฀weighted-average฀expected฀return฀on฀plan฀assets฀of฀8.0%฀for฀the฀U.S.฀plans฀and฀5.3%฀for฀the฀non-U.S.฀
plans฀in฀determining฀the฀estimated฀pension฀expense฀for฀2007.฀The฀comparable฀rates฀used฀for฀the฀calculation฀of฀the฀2006฀฀
pension฀expense฀were฀8.0%฀and฀5.1%฀for฀the฀U.S.฀plans฀and฀non-U.S.฀plans,฀respectively.฀A฀25฀basis฀point฀change฀in฀the฀
weighted-average฀expected฀return฀on฀plan฀assets฀would฀impact฀consolidated฀pension฀expense฀by฀approximately฀$0.1฀฀
million฀for฀the฀U.S.฀plans฀and฀$0.4฀million฀for฀the฀non-U.S฀plans.฀Changes฀to฀these฀assumptions฀have฀historically฀not฀been฀฀
significant฀in฀any฀jurisdiction฀for฀any฀reporting฀period,฀and฀no฀significant฀adjustments฀to฀the฀amounts฀recorded฀have฀been฀฀
required฀in฀the฀past฀or฀are฀expected฀in฀the฀future.฀(See฀Note฀9฀to฀the฀consolidated฀financial฀statements฀for฀further฀information.)
U.S.฀Workers’฀Compensation
In฀the฀U.S.,฀we฀are฀self-insured฀in฀most฀states฀for฀workers’฀compensation฀claims฀for฀our฀temporary฀employees.฀We฀determine฀
the฀proper฀reserve฀balance฀using฀an฀actuarial฀valuation,฀which฀considers฀our฀historical฀payment฀experience฀and฀current฀฀
employee฀demographics.฀Our฀reserve฀for฀such฀claims฀as฀of฀December฀31,฀2006฀and฀2005฀was฀$99.3฀million฀and฀$106.5฀฀
million,฀respectively.฀Workers’฀compensation฀expense฀is฀recorded฀as฀a฀component฀of฀Cost฀of฀Services.
There฀are฀two฀main฀factors฀that฀impact฀workers’฀compensation฀expense:฀the฀number฀of฀claims฀and฀the฀cost฀per฀claim.฀The฀
number฀of฀claims฀is฀driven฀by฀the฀volume฀of฀hours฀worked,฀the฀business฀mix฀which฀reflects฀the฀type฀of฀work฀performed฀(for฀฀
example,฀office฀and฀professional฀work฀have฀fewer฀claims฀than฀industrial฀work),฀and฀the฀safety฀of฀the฀environment฀where฀the฀
work฀is฀performed.฀The฀cost฀per฀claim฀is฀driven฀primarily฀by฀the฀severity฀of฀the฀injury,฀related฀medical฀costs฀and฀lost-time฀wage฀
costs.฀A฀10%฀change฀in฀the฀number฀of฀claims฀or฀cost฀per฀claim฀would฀impact฀workers’฀compensation฀expense฀in฀the฀U.S.฀by฀
approximately฀$4.0฀million.
Historically,฀we฀have฀not฀had฀significant฀changes฀in฀our฀assumptions฀used฀in฀calculating฀our฀reserve฀balance฀or฀significant฀฀
adjustments฀to฀our฀reserve฀level.฀During฀2006,฀we฀saw฀a฀decline฀in฀workers’฀compensation฀expense,฀primarily฀as฀a฀result฀of฀
changes฀in฀business฀mix฀and฀an฀increased฀focus฀on฀safety,฀which฀included฀increased฀training฀of฀temporary฀workers฀and฀฀
customer฀site฀reviews.฀Given฀current฀claims฀experience฀and฀cost฀per฀claim,฀we฀do฀not฀expect฀a฀significant฀change฀in฀our฀workers’฀
compensation฀reserve฀in฀the฀near฀term.
Social฀Program฀Remittances฀and฀Payroll฀Tax฀Audit฀Exposure
On฀a฀routine฀basis,฀governmental฀agencies฀in฀some฀of฀the฀countries฀in฀which฀we฀operate฀audit฀our฀payroll฀tax฀calculations฀and฀
our฀compliance฀with฀other฀payroll-related฀regulations.฀These฀audits฀focus฀primarily฀on฀documentation฀requirements฀and฀our฀
support฀for฀our฀payroll฀tax฀remittances.฀Due฀to฀the฀nature฀of฀our฀business,฀the฀number฀of฀people฀that฀we฀employ,฀and฀the฀฀
complexity฀of฀some฀payroll฀tax฀regulations,฀we฀may฀have฀some฀adjustments฀to฀the฀payroll฀tax฀remittances฀as฀a฀result฀of฀these฀audits.
In฀France,฀in฀particular,฀the฀government฀has฀various฀social฀programs฀that฀are฀aimed฀at฀reducing฀the฀cost฀of฀labor฀and฀encouraging฀
employment,฀particularly฀for฀low-wage฀workers,฀through฀the฀reduction฀of฀payroll฀taxes฀(or฀social฀contribution).฀Due฀to฀the฀฀
number฀of฀new฀programs฀or฀program฀changes,฀and฀the฀complexity฀of฀compliance,฀we฀may฀have฀adjustments฀to฀the฀amount฀of฀
reductions฀claimed฀as฀a฀result฀of฀the฀audits.
We฀make฀an฀estimate฀of฀the฀additional฀remittances฀that฀may฀be฀required฀on฀a฀country-by-country฀basis,฀and฀record฀the฀฀
estimate฀as฀a฀component฀of฀Cost฀of฀Services฀or฀Selling฀and฀Administrative฀Expenses,฀as฀appropriate.฀Each฀country’s฀estimate฀
is฀based฀on฀the฀results฀of฀past฀audits฀and฀the฀number฀of฀years฀that฀have฀not฀yet฀been฀audited,฀with฀consideration฀for฀changing฀
business฀volumes฀and฀changes฀to฀the฀payroll฀tax฀regulations.฀To฀the฀extent฀that฀our฀actual฀experience฀differs฀from฀our฀฀
estimates,฀we฀will฀need฀to฀make฀adjustments฀to฀our฀reserve฀balance,฀which฀will฀impact฀the฀results฀of฀the฀related฀operation฀and฀
the฀operating฀segment฀in฀which฀it฀is฀reported.฀Other฀than฀France,฀we฀have฀not฀had฀any฀significant฀adjustments฀to฀the฀amounts฀
recorded฀as฀a฀result฀of฀any฀payroll฀tax฀audits,฀and฀we฀do฀not฀expect฀any฀significant฀adjustments฀to฀the฀recorded฀amounts฀in฀฀
the฀near฀term.