ManpowerGroup 2007 Annual Report Download - page 41

38 Manpower 2007 Annual Report Notes to Consolidated Financial Statements
Notes To Consolidated Financial Statements
in millions, except per share data
01.
Summary Of Significant Accounting Policies
Nature of Operations
Manpower Inc. is a world leader in the employment services industry. Our worldwide network of nearly 4,500 offi ces in 80 countries
and territories enables us to meet the needs of our clients in all industry segments. Our largest operations, based on revenues,
are located in the U.S., France, Italy and the U.K. We specialize in permanent, temporary and contract recruitment; employee
assessment and selection; training; outsourcing; and outplacement and consulting services. We provide services to a wide
variety of clients, none of which individually comprise a signifi cant portion of revenues for us as a whole.
Use of Estimates
The preparation of fi nancial statements in conformity with accounting principles generally accepted in the United States
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses for
the reporting period. Actual results could differ from these estimates.
Basis of Consolidation
The consolidated fi nancial statements include our operating results and the operating results of all of our subsidiaries. For
subsidiaries in which we have an ownership interest of 50% or less, but more than 20%, the consolidated fi nancial statements
refl ect our ownership share of those earnings using the equity method of accounting. These investments, as well as certain
other relationships, are also evaluated for consolidation under FASB (Financial Accounting Standards Board) Interpretation
No. 46R, “Consolidation of Variable Interest Entities.” These investments were $98.7 and $92.5 as of December 31, 2007 and
2006, respectively, and are included as Other Assets in the consolidated balance sheets. Included in Shareholders’ Equity as of
December 31, 2007 and 2006 are $52.3 and $50.1 of unremitted earnings from investments accounted for using the equity
method. All signifi cant intercompany accounts and transactions have been eliminated in consolidation.
Revenues and Receivables
We generate revenues from sales of services by our company-owned branch operations and from fees earned on sales of
services by our franchise operations. Revenues are recognized as services are performed. The majority of our revenues are
generated by our recruitment business, where billings are generally negotiated and invoiced on a per-hour basis. Accordingly,
as contingent workers are placed, we record revenue based on the hours worked. Permanent recruitment revenues are
recorded as placements are made. Provisions for sales allowances, based on historical experience, are recognized at the time
the related sale is recognized.
Our franchise agreements generally state that franchise fees are calculated based on a percentage of revenues. We record
franchise fee revenues monthly based on the amounts due under the franchise agreements for that month. Franchise fees,
which are included in Revenues from Services, were $35.7 for the years ended December 31, 2007 and 2006, and $35.8 for
the year ended 2005.
In our outplacement business, we recognize revenue from individual programs on a straight-line basis over the average length
of time for candidates to fi nd jobs based on historical data for the specifi c type of program. For group programs and large
projects within the outplacement business, we defer and recognize revenue over the period within which the contracts are
completed. In our consulting business, revenue is recognized upon the performance of the obligations under the consulting
service contract. The amount billed for outplacement and consulting services in excess of the amount recognized as revenue is
recorded as Deferred Revenue and included in Accrued Liabilities in our consolidated balance sheets. We had $46.3 and $46.4
recorded as Deferred Revenue as of December 31, 2007 and 2006, respectively.
We record revenues from sales of services and the related direct costs in accordance with Emerging Issues Task Force (“EITF”)
Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent” (“EITF Issue No. 99-19”). In situations where
we act as a principal in the transaction, we report gross revenues and cost of services. When we act as an agent, we report the
revenues on a net basis. Amounts billed to clients for out-of-pocket or other cost reimbursements are included in Revenues
from Services, and the related costs are included in Cost of Services.