ManpowerGroup 2006 Annual Report Download - page 46

Manpower฀2006฀Annual฀Report
42
NOT ES฀TO฀CONSOLID AT ED฀FINA NCIAL ฀S TATEMENT S฀
in฀million s,฀except฀per฀sha re฀data
Notes฀to฀Consolidated฀Financial฀Statements฀
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.”฀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.”฀Under฀SFAS฀No.฀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฀translation฀adjustments฀are฀recorded฀as฀
a฀component฀of฀Accumulated฀Other฀Comprehensive฀Income,฀which฀is฀included฀in฀Shareholders’฀Equity.
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฀trans-
lation฀gains฀or฀losses฀related฀to฀these฀borrowings฀are฀included฀as฀a฀component฀of฀Accumulated฀Other฀Comprehensive฀Income.
Shareholders’฀Equity
In฀October฀2006,฀the฀Board฀of฀Directors฀authorized฀the฀repurchase฀of฀5.0฀million฀shares฀of฀our฀common฀stock,฀not฀to฀exceed฀a฀
total฀purchase฀price฀of฀$325.0.฀In฀October฀2004฀and฀2005,฀the฀Board฀of฀Directors฀authorized฀the฀repurchase฀of฀5.0฀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.฀The฀฀
repurchases฀under฀the฀2004฀authorization฀were฀completed฀in฀2005฀and฀the฀repurchases฀under฀the฀2005฀authorization฀were฀
completed฀during฀2005฀and฀the฀first฀eight฀months฀of฀2006.฀We฀repurchased฀the฀entire฀5.0฀million฀shares฀of฀common฀stock฀at฀a฀
total฀cost฀of฀$203.5฀under฀the฀2004฀authorization฀and฀4.3฀million฀shares฀at฀a฀total฀cost฀of฀$250.0฀under฀the฀2005฀authorization.฀
There฀were฀no฀share฀repurchases฀in฀2004฀and฀there฀have฀been฀no฀repurchases฀under฀the฀2006฀authorization฀as฀of฀December฀
31,฀2006.
Statement฀of฀Cash฀Flows
We฀consider฀all฀highly฀liquid฀investments฀with฀a฀maturity฀of฀three฀months฀or฀less฀when฀purchased฀to฀be฀cash฀equivalents.
Recently฀Issued฀Accounting฀Standards
During฀July฀2006,฀the฀FASB฀issued฀FASB฀Interpretation฀No.฀48,฀“Accounting฀for฀Uncertainty฀in฀Income฀Taxes,฀and฀Related฀
Implementation฀Issues,”฀(“FIN฀48”).฀FIN฀48฀prescribes฀a฀comprehensive฀model฀for฀how฀a฀company฀should฀recognize,฀measure,฀
present,฀and฀disclose฀in฀its฀financial฀statements฀uncertain฀tax฀positions฀that฀the฀company฀has฀taken฀or฀expects฀to฀take฀on฀a฀tax฀
return.฀FIN฀48฀is฀effective฀for฀fiscal฀years฀beginning฀January฀1,฀2007.฀We฀expect฀the฀adoption฀of฀this฀new฀standard฀to฀be฀immaterial฀
to฀the฀consolidated฀financial฀statements.
In฀September฀2006,฀the฀FASB฀issued฀Statement฀No.฀157,฀“Fair฀Value฀Measurements,”฀(“SFAS฀157”).฀SFAS฀157฀defines฀fair฀
value,฀establishes฀a฀framework฀for฀measuring฀fair฀value฀in฀accordance฀with฀generally฀accepted฀accounting฀principles,฀and฀฀
expands฀disclosures฀about฀fair฀value฀measurements.฀SFAS฀157฀is฀effective฀for฀us฀in฀2008.฀We฀are฀currently฀assessing฀the฀฀
impact฀of฀the฀adoption฀of฀this฀statement.
During฀September฀2006,฀the฀FASB฀issued฀SFAS฀No.฀158,฀“Employers’฀Accounting฀for฀Defined฀Benefit฀Pension฀and฀Other฀
Postretirement฀Plans,฀an฀amendment฀of฀FASB฀Statements฀No.฀87,฀88,฀106,฀and฀132(R),”฀(“SFAS฀158”).฀SFAS฀158฀requires฀that฀
we฀recognize฀the฀overfunded฀or฀underfunded฀status฀of฀our฀defined฀benefit฀and฀retiree฀medical฀plans฀(our฀“Plans”)฀as฀an฀asset฀or฀
liability฀in฀our฀consolidated฀balance฀sheets,฀with฀changes฀in฀the฀funded฀status฀recognized฀through฀comprehensive฀income฀in฀the฀
year฀in฀which฀they฀occur.฀We฀adopted฀SFAS฀158฀as฀of฀December฀31,฀2006.฀The฀net฀impact฀of฀the฀initial฀application฀of฀SFAS฀158฀
was฀$6.7,฀which฀resulted฀in฀a฀reduction฀in฀Shareholders’฀Equity฀on฀our฀consolidated฀balance฀sheet.฀See฀Note฀9฀for฀the฀incre-
mental฀effect฀of฀adopting฀SFAS฀158฀on฀individual฀line฀items฀in฀our฀consolidated฀balance฀sheet.฀SFAS฀158฀had฀no฀impact฀on฀our฀
consolidated฀statements฀of฀operations฀or฀cash฀flows฀for฀the฀year฀ending฀December฀31,฀2006.฀SFAS฀158฀also฀requires฀us฀by฀
2008฀to฀measure฀the฀funded฀status฀of฀our฀Plans฀as฀of฀the฀balance฀sheet฀date,฀rather฀than฀as฀of฀an฀earlier฀measurement฀date.฀We฀
do฀not฀expect฀the฀impact฀of฀the฀change฀in฀measurement฀date฀to฀have฀a฀material฀impact฀on฀our฀consolidated฀financial฀statements.