ManpowerGroup 2007 Annual Report Download - page 53

50 Manpower 2007 Annual Report Notes to Consolidated Financial Statements
Notes To Consolidated Financial Statements
in millions, except per share data
The current tax liability is recorded in Accrued Liabilities and the noncurrent future income tax benefi ts are recorded in Other
Assets in the consolidated balance sheets.
We have U.S. Federal and non-U.S. net operating loss carryforwards and U.S. state net operating loss carryforwards totaling
$375.1 and $88.3, respectively, as of December 31, 2007. The net operating loss carryforwards expire as follows:
U.S. Federal & non-U.S. U.S. State
2008 $ 10.0 $ 1.8
2009 9.5 6.2
2010 4.3 2.7
2011 8.0 5.4
2012 6.0 1.0
Thereafter 103.6 71.2
No expirations 233.7 —
Total net operating loss carryforwards $ 375.1 $ 88.3
We have recorded a deferred tax asset of $116.8 as of December 31, 2007, for the benefi t of these net operating losses.
Realization of this asset is dependent on generating suffi cient taxable income prior to the expiration of the loss carryforwards. A
valuation allowance of $105.5 has been recorded as of December 31, 2007, as management believes that realization of certain
loss carryforwards and other deferred tax assets is unlikely.
Pretax income of non-U.S operations was $567.5, $264.9 and $189.7 in 2007, 2006 and 2005, respectively. We have not
provided U.S. income taxes and non-U.S. withholding taxes on $1,114.9 of unremitted earnings of non-U.S. subsidiaries that
is considered to be reinvested indefi nitely. Deferred taxes are provided on unremitted earnings of non-U.S. subsidiaries when
we plan to remit those earnings. As of December 31, 2007, 2006 and 2005, we have recorded a deferred tax liability of $56.9,
$23.5 and $9.8, respectively, related to non-U.S. earnings that we plan to remit.
As a result of our adoption of FIN 48, we recognized a $4.3 increase in the net liability for unrecognized tax benefi ts, which
was accounted for as an adjustment to retained earnings as of January 1, 2007. As of the date of adoption, we had
gross unrecognized tax benefi ts which relate to various tax jurisdictions, including interest and penalities, of $67.0 on our
consolidated balance sheet and related tax benefi ts of $24.5. The net amount of $42.5 would favorably affect the effective
tax rate if recognized.
As of December 31, 2007, we have gross unrecognized tax benefi ts related to various tax jurisdictions, including interest and
penalties, of $67.2, of which $3.1 is recorded as a current deferred tax liability. We have related tax benefi ts of $22.6, and the net
amount of $44.6 would favorably affect the effective tax rate if recognized. There were no material settlements in 2007. We do
not expect our unrecognized tax benefi ts to change signifi cantly over the next 12 months.
We recognize accrued interest and penalties related to unrecognized tax benefi ts in income tax expense. We accrued net
interest and penalties of $0.6 during 2007. We have recorded a liability for potential interest and penalties of $6.7 as of December
31, 2007.
The following table summarizes the activity related to our unrecognized tax benefi ts during 2007:
Gross unrecognized tax benefi ts, January 1, 2007 $ 60.9
Increases in prior year tax positions 5.7
Decreases in prior year tax positions (10.0)
Increases in current year tax positions 8.4
Expiration of statute of limitations for the assessment of taxes (4.5)
Gross unrecognized tax benefi ts, December 31, 2007 $ 60.5
Potential interest and penalties 6.7
Balance, December 31, 2007 $ 67.2