ManpowerGroup 2007 Annual Report Download - page 45

42 Manpower 2007 Annual Report Notes to Consolidated Financial Statements
Notes To Consolidated Financial Statements
in millions, except per share data
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 fl ow
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. The ineffective portions of the changes in the fair value of hedges are recognized in earnings.
Foreign Currency Translation
The fi nancial 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 translation gains or losses related to these borrowings are included as a component of Accumulated Other Comprehensive
Income.
Shareholders’ Equity
In August 2007, the Board of Directors authorized the repurchase of 5.0 million shares of our common stock, not to exceed a
total purchase price of $400.0. In October 2006, 2005 and 2004, 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, $250.0 and $250.0, respectively. 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. As of December 31, 2007, we have repurchased 1.7 million shares at a total cost of $105.7
under the 2007 authorization. Under the 2006 authorization, we repurchased 4.4 million shares of common stock at a total cost
of $325.0 during 2007. Under the 2005 authorization, we repurchased 4.3 million shares at a total cost of $250.0 during 2005
and the fi rst eight months of 2006. Under the 2004 authorization, we repurchased 5.0 million shares at a total cost of $203.5
during 2005.
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
In January 2007, we adopted the Financial Accounting Standards Board (“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 fi nancial statements uncertain tax positions that the
company has taken or expects to take on a tax return. We adopted FIN 48 as of January 1, 2007. The net impact of the initial
application of FIN 48 was a $4.3 million increase in the net liability for unrecognized tax benefi ts, which was accounted for as
an adjustment to Retained Earnings on our consolidated balance sheet. (See Note 5 for further information regarding the
application of FIN 48.)
In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R
changes the requirements for an acquirer’s recognition and measurement of the assets acquired and the liabilities assumed in a
business combination. SFAS 141R is effective for us in 2009. We are currently assessing the impact of the adoption of this
statement.
In September 2006, the FASB issued Statement No. 157, “Fair Value Measurements” (”SFAS 157”). SFAS 157 defi nes fair
value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and
expands disclosures about fair value measurements. Subsequently, in February 2007, the FASB issued Statement No. 159,
“The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to choose to
measure many fi nancial assets and fi nancial liabilities at fair value. Unrealized gains and losses on items for which the fair value
option has been elected are reported in earnings. Both SFAS 157 and SFAS 159 are effective for us in 2008. We do not expect
the adoption of these statements to have a material impact on our consolidated fi nancial statements.